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AAOA Personal Observation

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credit_endurance
Valued Contributor

AAOA Personal Observation

Hey forum.

 

I was just looking over my accounts and AAOA within my short rebuild thus far(only 2 years) and noticed something very interesting. I started off with a 3 year 8 month AAOA in April of 2015. This is when I only had 1 secured cc through a local credit union and 1 cap on secured card for a whopping total credit lines of ($600.00) lol! I have then since added some 25 bank/store cards, 2 PLOC. Through the adding of these accounts my AAOA had dropped to 1year  5months at it's lowest point. So with me gardening for the last 6 months my AAOA has rebounded to around 2 years which looks like for every account added to my report, my AAOA dropped on average of 1 month per every account reported. So to ask the experts, would this be an accurate assumption in your opinion?

Starting FICO08 Scores 2016 All in the mid 500’s
Current FICO08 Scores SEP 2023 (TU 834) (EQ 831 (EXP 831)

“The credit is no longer bruised, it has endured the test of time” (formally know as bruisedcredit)

Message 1 of 11
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Anonymous
Not applicable

Re: AAOA Personal Observation

In my sig is a credit helper spreadsheet that has an AAoA tab.  Enter all your accounts and your report dates.  Once that is entered you can add new future accounts to app with a future report date and see how it affects your AAoA going forward.

 

Generally speaking when you have an already low AAoA, adding new accounts together lets them age together and that happens pretty quickly.

Message 2 of 11
Anonymous
Not applicable

Re: AAOA Personal Observation

It's all a numbers game and the math can be worked out pretty quickly for any example.  The more accounts you have, the less adding new accounts (factoring in zeros) will adversely impact AAoA.  So if you add 10 accounts and your AAoA drops by 10 months, you can as a generalization say that you lost 1 month of AAoA per account... but really with diminishing returns that's not the actual case for each individual account.  I say this because the first new account will lower AAoA the most, where the last will lower it the least since by that time there will be 9 other accounts that have lowered AAoA already.

Message 3 of 11
credit_endurance
Valued Contributor

Re: AAOA Personal Observation


@Anonymous wrote:

It's all a numbers game and the math can be worked out pretty quickly for any example.  The more accounts you have, the less adding new accounts (factoring in zeros) will adversely impact AAoA.  So if you add 10 accounts and your AAoA drops by 10 months, you can as a generalization say that you lost 1 month of AAoA per account... but really with diminishing returns that's not the actual case for each individual account.  I say this because the first new account will lower AAoA the most, where the last will lower it the least since by that time there will be 9 other accounts that have lowered AAoA already.


So when you reach that 'standard" 2 year mark in AAOA each account added from that point on presents less impact on your AAOA then when you where below the 2 year threashold? Then if you can reach the 7 year mark that gives you maximum scoring potential?

Starting FICO08 Scores 2016 All in the mid 500’s
Current FICO08 Scores SEP 2023 (TU 834) (EQ 831 (EXP 831)

“The credit is no longer bruised, it has endured the test of time” (formally know as bruisedcredit)

Message 4 of 11
Anonymous
Not applicable

Re: AAOA Personal Observation


@credit_endurance wrote:


So when you reach that 'standard" 2 year mark in AAOA each account added from that point on presents less impact on your AAOA then when you where below the 2 year threashold? Then if you can reach the 7 year mark that gives you maximum scoring potential?


Not really.  AAoA is most impacted by the number of current accounts on your credit report that go into making up that AAoA.  While current AAoA can matter some depending on the situation, it's far less of a factor that the number of accounts that are resulting in that AAoA.

 

Quick example.  You have someone with 20 accounts on his credit report that has a current AAoA of 1.5 years.  If he adds 2 new accounts, his AAoA will drop to about 1.4 years.

 

Another person has only 4 accounts on their credit report with a current AAoA of 2 years.  This guy also adds 2 new accounts, his AAoA will drop to about 1.3 years.

 

As you can see, the starting AAoA was not the major factor here in where these two ended up following the 2 new accounts.  The guy who was already at 2 years AAoA lost .7 years off of his AAoA due to having so few accounts on his credit report, where the other guy with a lower starting AAoA was able to absorb the 2 new accounts much easier with his 20 accounts already on his report.  In this example, if both of these guys go to gardening, the one with the lower starting AAoA of 1.5 years will actually reach the 2 year AAoA mark about a month before the other guy.  Hopefully this makes sense.

Message 5 of 11
credit_endurance
Valued Contributor

Re: AAOA Personal Observation


@Anonymous wrote:

@credit_endurance wrote:


So when you reach that 'standard" 2 year mark in AAOA each account added from that point on presents less impact on your AAOA then when you where below the 2 year threashold? Then if you can reach the 7 year mark that gives you maximum scoring potential?


Not really.  AAoA is most impacted by the number of current accounts on your credit report that go into making up that AAoA.  While current AAoA can matter some depending on the situation, it's far less of a factor that the number of accounts that are resulting in that AAoA.

 

Quick example.  You have someone with 20 accounts on his credit report that has a current AAoA of 1.5 years.  If he adds 2 new accounts, his AAoA will drop to about 1.4 years.

 

Another person has only 4 accounts on their credit report with a current AAoA of 2 years.  This guy also adds 2 new accounts, his AAoA will drop to about 1.3 years.

 

As you can see, the starting AAoA was not the major factor here in where these two ended up following the 2 new accounts.  The guy who was already at 2 years AAoA lost .7 years off of his AAoA due to having so few accounts on his credit report, where the other guy with a lower starting AAoA was able to absorb the 2 new accounts much easier with his 20 accounts already on his report.  In this example, if both of these guys go to gardening, the one with the lower starting AAoA of 1.5 years will actually reach the 2 year AAoA mark about a month before the other guy.  Hopefully this makes sense.


Makes perfect sense. So in my case (looking to add another account or 2 before going into the garden indefinitely) won't set me back much if at all with my current AAOA of 2 years(don't want to drop down past that point)?

Starting FICO08 Scores 2016 All in the mid 500’s
Current FICO08 Scores SEP 2023 (TU 834) (EQ 831 (EXP 831)

“The credit is no longer bruised, it has endured the test of time” (formally know as bruisedcredit)

Message 6 of 11
Anonymous
Not applicable

Re: AAOA Personal Observation

If your AAoA is exactly 2 years (2.0) and you add 2 new accounts, based on the number of accounts you have your AAoA will drop by 1-2 months.  This means that your AAoA will again reach 2.0 years in 1-2 months, so you'll be right back to where you were. 

 

Keep in mind that for scoring purposes, FICO only scores AAoA with respect to whole numbers, not decimals.  This means that it doesn't matter if your AAoA is 2.0 years or 2.9 years, it's going to be scored as "2" under FICO scoring.  So if you AAoA is 2.0 years now (scored as "2") and you add 2 new accounts and you drop to 1.8 or 1.9 years, FICO scoring scores that as "1" so you will see a score drop.  As I said above, though, in 1-2 months you'll be back at 2.0 again so you'll move from "1" to "2" in terms of scoring, so whatever points you lost from your AAoA dropping a year will return.

 

If you were just ballparking your AAoA as 2 years, but it is in fact 2.2 years, adding those 2 new accounts may drop you to 2.0 years and in this example FICO scoring would see "2" as your AAoA in both situations, thus your score wouldn't drop at all with the addition of the 2 new accounts with respect to AAoA.

Message 7 of 11
credit_endurance
Valued Contributor

Re: AAOA Personal Observation


@Anonymous wrote:

If your AAoA is exactly 2 years (2.0) and you add 2 new accounts, based on the number of accounts you have your AAoA will drop by 1-2 months.  This means that your AAoA will again reach 2.0 years in 1-2 months, so you'll be right back to where you were. 

 

Keep in mind that for scoring purposes, FICO only scores AAoA with respect to whole numbers, not decimals.  This means that it doesn't matter if your AAoA is 2.0 years or 2.9 years, it's going to be scored as "2" under FICO scoring.  So if you AAoA is 2.0 years now (scored as "2") and you add 2 new accounts and you drop to 1.8 or 1.9 years, FICO scoring scores that as "1" so you will see a score drop.  As I said above, though, in 1-2 months you'll be back at 2.0 again so you'll move from "1" to "2" in terms of scoring, so whatever points you lost from your AAoA dropping a year will return.

 

If you were just ballparking your AAoA as 2 years, but it is in fact 2.2 years, adding those 2 new accounts may drop you to 2.0 years and in this example FICO scoring would see "2" as your AAoA in both situations, thus your score wouldn't drop at all with the addition of the 2 new accounts with respect to AAoA.


Got it! Thoroughly explained in detail. Thanks again BBS for your knowledge.

Starting FICO08 Scores 2016 All in the mid 500’s
Current FICO08 Scores SEP 2023 (TU 834) (EQ 831 (EXP 831)

“The credit is no longer bruised, it has endured the test of time” (formally know as bruisedcredit)

Message 8 of 11
Anonymous
Not applicable

Re: AAOA Personal Observation

You got it.

 

It may also be a fun exercise for you if you're interested in pulling your 3 FICO 08 scores from a place like CCT for $1 just before you app for your next 2 cards so you can have your scores at 2 years AAoA, then pull them a month or so later after the 2 new accounts report and you receive the AAoA drop to 1 year.  Of course you have to factor in the inquiries as well in the score drop, but depending on how many you have currently you may or may not see a score drop from them.  Also, if you've opened an account within the last year, your AoYA is already less than 1 year so you wouldn't see a score drop from that... so there's a chance the only score drop you would see is strictly from AAoA, which would give a nice data point on your file.  Then you would know that in 1-2 months when you return to 2 years AAoA that those points lost would return at that time.

Message 9 of 11
credit_endurance
Valued Contributor

Re: AAOA Personal Observation


@Anonymous wrote:

You got it.

 

It may also be a fun exercise for you if you're interested in pulling your 3 FICO 08 scores from a place like CCT for $1 just before you app for your next 2 cards so you can have your scores at 2 years AAoA, then pull them a month or so later after the 2 new accounts report and you receive the AAoA drop to 1 year.  Of course you have to factor in the inquiries as well in the score drop, but depending on how many you have currently you may or may not see a score drop from them.  Also, if you've opened an account within the last year, your AoYA is already less than 1 year so you wouldn't see a score drop from that... so there's a chance the only score drop you would see is strictly from AAoA, which would give a nice data point on your file.  Then you would know that in 1-2 months when you return to 2 years AAoA that those points lost would return at that time.


I think I will sign up for a trial with CCT just to monitor my actions. But you know something BBS, Im kinda loving my 2 years of AAoA right now seeing how it seems like forever it takes to get here lol! Not really sure if I want to app for anything now.Smiley Happy But sure that will change a week or so from now I will keep you updated.

Starting FICO08 Scores 2016 All in the mid 500’s
Current FICO08 Scores SEP 2023 (TU 834) (EQ 831 (EXP 831)

“The credit is no longer bruised, it has endured the test of time” (formally know as bruisedcredit)

Message 10 of 11
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