cancel
Showing results for 
Search instead for 
Did you mean: 

Will a new student loan shorten my age of credit history?

tag
Anonymous
Not applicable

Will a new student loan shorten my age of credit history?

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?
Message 1 of 12
11 REPLIES 11
RobertEG
Legendary Contributor

Re: Will a new student loan shorten my age of credit history?

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.

Message 2 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?

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?
Message 3 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?

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.

Message 4 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?


@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.

Message 5 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?

Good catch from CGID above that beat me to the punch. Opening a new account does not shorten your age of credit history, but it can lower your average age of accounts.
Message 6 of 12
SouthJamaica
Mega Contributor

Re: Will a new student loan shorten my age of credit history?


@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.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 7 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?

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.

Message 8 of 12
SouthJamaica
Mega Contributor

Re: Will a new student loan shorten my age 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.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 9 of 12
Anonymous
Not applicable

Re: Will a new student loan shorten my age of credit history?

Thank you all for your responses.
I'd like to take out the Federal Student Loan because of the low interest rate and the flexible repayment terms, but I don't want it to affect my credit score specifically the impact it may have on age of accounts.

Some statistics:
Age of oldest account = 11y 8m
Average Age of Accounts = 5yr 6m
Current Credit Score = 805

How will opening a new Fed Student Loan affect this?
Message 10 of 12
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.