A History of Payments: How Much Does Starting Over Ding Your FICO?

By Markets Fool.com

For most adults who are out of school, there's only one "grade" left that really matters in your life: Your credit score. A good one can save you hundreds of thousands of dollars over the course of your lifetime, and a poor one prevent you from living the life you want to.

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In this clipfrom Motley Fool Answers, Alison Southwick, Robert Brokamp and Fool alumna Dayana Yochim take on an unusual question about the "length of credit history" component of your score: Should people be concerned about the impact of switching away from a longtime service provider or utility like a cellphone company?

A full transcript follows the video.

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This podcast was recorded on July 12, 2016.

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Alison Southwick: The next question comes to us from Jared. Jared writes: "My longest line of credit seems to be my cellphone. In evaluating how much I can save switching to a different provider, it struck me that I would adversely impact my credit score to some degree. Can you advise how to calculate the impact of a lower score? I suspect I will be moving; thus buying a house in the next two years."

Dayana Yochim: That's a great question. MyFICO.com has a credit score simulator on its site, and you can tinker with the numbers there just to see. Saving money -- probably you could save significant money by switching, I'm assuming, if he's asking the question -- is probably more important at this point than what it's going to do to your credit score, because whatever it does, you're buying a house in two years. It will recover before then.

Also, this is not really a traditional line of credit that's reported on a typical credit report. This is a utility bill that's sometimes not reported. They are not required to report. There are other databases where this definitely is showing up, but those probably matter a little bit less. A good question about the length of credit history. I think here go ahead and make the change, and you've got time to recover, even if it's a slight ding. And by the way, hopefully it's an account in good standing. This is going to be on your record for quite some time.

Robert Brokamp: And definitely very smart to be thinking about this before getting a mortgage. It gives you time to get your report, fix anything that's wrong, and also do a few things to boost your score.

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