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Yes.
Installment loans are accounts of the consumer, and are included in your average age of accounts calculation once reported.
Collections, however, are not included.
That's exactly how you do it. Just remember that "date closed" doesn't matter. Closed and open accounts count the same: their age is determined solely by the Date Opened.
Some online creditt monitoring services (CMS's) will compute your AAoA for you. Be aware that Credit Karma, for all its many virtues, does this wrong. Do not rely on its summary front-end page that gives you your AAoA.
Other CMS do the computation correctly. For example the free CMS at credit.com gives you the correct value for your AAoA (based on data drawn from Experian).
Finally, remember that you could easily have a different AAoA at each of the three credit bureaus, if you do not have exactly the same accounts and the same date opened.
@Anonymous wrote:
Thanks for the response. Is figuring out age of credit history as easy as adding the age of each account together and dividing by the number of accounts?
You use the phrase Age of Credit History. There are two (very different) factors you might mean.
Average Age of Accounts (AAoA) is the factor we have been talking about thus far.
But there's another factor called Age of Oldest Account. This is closer to what someone might mean who says Age of Credit History. That's how long you have had credit accounts (based on the oldest account currently listed). Both factors are important and they are used by credit scoring models in different ways.
Age of OLdest Account is real easy. It's the age of your oldest account. :-) And again, doesn't matter whether that account is open or closed.
Because Age of Oldest Account is an important factor you should be very careful about closing your two oldest credit cards. Closing your oldest card will not change your Age of Oldest Account right away. But ten years later, that account will fall off and then it could have a big effect on your score.
@Anonymous wrote:
I'm considering taking out a new federal student loan. Will it shortened my age of credit history?
I believe a federal student loan is considered installment debt. Does installment debt shorten age of credit history?
Yes. Each new account (a) lowers your average age of accounts and (b) gives you a new most recent account.
SJ, it's important thought that the OP understand that while AAoA and AoYA will be reduced, AoOA will not... and AoOA is most fitting to length of credit history.
@Anonymous wrote:SJ, it's important thought that the OP understand that while AAoA and AoYA will be reduced, AoOA will not... and AoOA is most fitting to length of credit history.
While age of oldest account is a factor that will be unaffected, average age of accounts and age of youngest account will be affected.