When does account age become an asset?

[Anonymous]

As a new credit builder, i hear a lot about average account age and how significant it is in calculating FICO scores.   

At what point is account age an asset?  For instance, if you only have 1 credit line which is a month old, is that a negative?  Does it take six months of on-time payments to become a positive?  A year?  Five years?    

How do the different timespans impact score (assuming all cards are paid off every month on time)?

[Anonymous]

Fair Isaac is far too secretive to ever divulge such details of their scoring. What we DO know is that AAoA is a small potion of scoring, 15% I think, and accounts are considered 'mature' when they pass the two year mark.

Strive for a long AAoA, but don't worry about it too much. Basically don't close accounts unless they cost you money in Annual Fees. The more accounts you open early on, and the longer you keep them open, the better your AAoA 'anchor' becomes.

[RobertEG]

A wrinkle in using AAoA as a scoring criterion is that many consumers arbitrarily loose their oldest accounts, thus skewing their AAoA.

The CRAs all have an arbitrary and subjective internal policy of deletion of old accounts once they have been closed for approx ten years.

They do that for housekeeping reasons, thus recouping database space.

They assume that old, closed accounts are of no more interest to their customers (creditors), totally ignoring the clear impact on consumer credti scores.

[masscredit]

So you could lose points from a declining AAoA when old accounts are deleted? I have some accounts that are approaching 10 years. They were either closed because they weren't being used or were IIB. 

[Anonymous]

I don't think deleting closed accounts after 10 years is arbitrary.  Bad accounts and bankruptcies fall off after 7-10 years.  If bad items fall off within 10 years it makes sense that good items that are closed fall off as well.  FICO is designed to calculate risk of future default.  Taking into account good accounts from 10+ years but not bad accounts would not help in predicting future behavior.  If we could all have our historical good accounts listed and our bad accounts deleted we'd all have 850's across th board.

[RobertEG]

By arbitrary I meant at the discretion only of the CRAs.

Exclusion of adverse information after certain periods is a requirement of the FCRA, and not at anyone's discretion.

Deltion of consumer accounts after 10 years from closure is not a provision of the FCRA, and is an arbitrary action of the CRAs.

It most definately has negative effect on consumer credit scores by removal of some of the older accounts.

[Anonymous]

---

@Anonymous wrote:

I don't think deleting closed accounts after 10 years is arbitrary.  Bad accounts and bankruptcies fall off after 7-10 years.  If bad items fall off within 10 years it makes sense that good items that are closed fall off as well.  FICO is designed to calculate risk of future default.  Taking into account good accounts from 10+ years but not bad accounts would not help in predicting future behavior.  If we could all have our historical good accounts listed and our bad accounts deleted we'd all have 850's across th board.

---

One only has to read boards like this one, with multitudes of people saying "my scores *used* to be 750/800" to realize that FICO is a failure at 'predicting future behavior' for a great portion of the population. Yes, it works for some at the high end; and yes it works for some at the low end - BUT for the great many of us riding the roller coaster in the middle, it IS an abject failure at prediction.

Just my opinion.

[toi34]

---

@RobertEG wrote:

By arbitrary I meant at the discretion only of the CRAs.

Exclusion of adverse information after certain periods is a requirement of the FCRA, and not at anyone's discretion.

Deltion of consumer accounts after 10 years from closure is not a provision of the FCRA, and is an arbitrary action of the CRAs.

It most definately has negative effect on consumer credit scores by removal of some of the older accounts.

---

I can attest to this: I just recently had two 20+ year old POSITIVE accounts deleted by Experian (without request) because they had been closed for 10 years (in good standing). As a result, my EX score dropped by 27 points! I was, and still am pissed! So yeah, it is definately arbritrary. 

[Anonymous]

---

@toi34 wrote:

---

@RobertEG wrote:

By arbitrary I meant at the discretion only of the CRAs.

Exclusion of adverse information after certain periods is a requirement of the FCRA, and not at anyone's discretion.

Deltion of consumer accounts after 10 years from closure is not a provision of the FCRA, and is an arbitrary action of the CRAs.

It most definately has negative effect on consumer credit scores by removal of some of the older accounts.

---

I can attest to this: I just recently had two 20+ year old POSITIVE accounts deleted by Experian (without request) because they had been closed for 10 years (in good standing). As a result, my EX score dropped by 27 points! I was, and still am pissed! So yeah, it is definately arbritrary. 

---

Man, that is scary.  Definitely emphasizes the value of opening credit cards over getting a loan or financing a purchase...  

In fact, makes me realize that if ever I need to finance something, opening an additional card to put it on is far more valuable in the long run than financing it (at least in terms of a 10+ year mindset)

[securingourfuture]

---

@toi34 wrote:

---

@RobertEG wrote:

By arbitrary I meant at the discretion only of the CRAs.

Exclusion of adverse information after certain periods is a requirement of the FCRA, and not at anyone's discretion.

Deltion of consumer accounts after 10 years from closure is not a provision of the FCRA, and is an arbitrary action of the CRAs.

It most definately has negative effect on consumer credit scores by removal of some of the older accounts.

---

I can attest to this: I just recently had two 20+ year old POSITIVE accounts deleted by Experian (without request) because they had been closed for 10 years (in good standing). As a result, my EX score dropped by 27 points! I was, and still am pissed! So yeah, it is definately arbritrary. 

---

I am with you on this one.  TU is still reporting some old positive student loans that EQ and EXP have since deleted.  At this moment, TU is about 40 points higher than the other bureaus.  The difference should smooth out, but not for about 24 months.  SO yeah...