AAoA & Buckets

[Anonymous]

Has anyone been able to show if there is any relationship between account aging and scoring "Buckets"

I'm around 5-6 years AAoA on my account and current a 690ish on all of my FICO Mortgage scores.

I don't have any open installments (my closed is only listed on EX) and I have 1 open CC. Also have a 2 year old mortgage.

The rest of my history is based on AU accounts.

If I open another revolving line, my AAoA will drop to 4-4-5 years.

Is there any sort of "Bucket System" for AAoA that would prevent me from being a 700 at that point?

[Anonymous]

Hello el-P!  You raise what may really be two questions:

(1)  Is AAoA an important factor in credit scoring, and will my score go down if my AAoA goes from 5 to 4?

(2)  What is rebucketing and is AAoA one of the things that FICO uses in determining its buckets? 

I think #1 turns out to be the real question you have and it is much easier to say something definite.  The answer to #1 is as follows. 

Yes, AAoA is a significant factor.  It is one factor of a group of factors called Length of Credit History.  The group accounts for roughly 15% of your score and AAoA is probably the most significant in that group.  (Another important factor from the group is "Age of Oldest Account.") 

I think it is safe to say that AAoA is calculated as an integer.  Thus, 5.1%, 5.4% and 5.9% are all considered the same.  You have an AAoA of 5.x% right now, I think you said.  That translates to 5.  Adding a new CC, you said, will take you to an AAoA of 4.x% (or 4). 

Although there is no published chart that says that for all profiles, going from 5 to 4 will have an effect on your score, that's a young enough of AAoA to be able to say with some confidence that it will.

So I think the real question you have is: Will my score go down?  The answer is yes it will, partly because of a drop in AAoA, partly because of other factors.  (A factor that FICO considers is "Has the consumer opened any new credit cards recently?"  If yes, that also causes a score drop.)

There's another implicit question, however, and that is "Is it still a good idea to open one a new CC anyway, given my profile?"  The answer is definitely yes.  The harm that opening the card does won't last long (your accounts will keep aging).  And you only have ONE credit card in your name right now and are relying on AU accounts for your age.  Part of your credit plan long-term (even in the medium term) should be to be establishing your OWN credit history, so that when a creditor pulls your report he doesn't see a bunch of AU's artifically inflating your score.  You should have a goal of establishing three cards in your own name and then eventually dropping trhe AUs.

We can also talk to you about rebucketing, but that is an arcane aspect of credit scoring about which far less is know for sure and which in any case doesn't seem to address your real questions, which seem to be:

(a)  Will I experience any score damage by opening a new CC?  Yes (due to lowered AAoA and other factors).

(b)  Will it be a lot of damage?  No.

(c)  Should I open the card anyway?  Very much so.

[Anonymous]

That's a great and very complete answer... Thanks.

I guess my question relates more to the very short term though... let's say over the next 1-2 months. I assume the answer is yes, it's going to hurt and probably keep me away from possible reaching 700 in the next 45 days which is a non-starter.

I have a much more complete plan of attack for my credit after I qualify for and close my mortgage. I'm just looking for any band-aids I can find to artifically pump it up for the next 90-120 days.

[Anonymous]

The best short-term bandaid for your situation is to adjust the balances of all the credit cards reporting on your profile.  This would include both the AU cards and the single card that you have in your name.  You want to be sure that all the AU accounts report as $0 and your own card reports a small positive balance > $5.  That will help with two factors from one of the biggest groups in the model ("Amounts Owed").

Is that something you can do?

[Anonymous]

In addition to the recomendation I made immediately above, can you confirm that ALL of your AU accounts are perfectly clean in terms of payment history?  They don't have lates or any other derogatory information connected with them?

Furthermore, can you comment on whether you have any derogatory data on your own (non-AU) accounts?  That would include lates, missed payments, charge-offs, liens, collections, etc. 

If the AU accounts have negative payment history, you may get a significant boost from having those negative accounts removed (ask the account holder and creditor to remove you as an AU). 

If your non-AU accounts have negative data, there's a small chnace that it can be removed, via tactics like writing good will letters and such.  You can find out more about that by creating a post inside the Rebuilding forum.

[Anonymous]

Thanks again.... You're line of thinking is right in line with my own and you've actually answered a few other questions I've posted other places that haven't received answers yet.

All AU accounts are clean. My wife is an 805 mid score....perfect credit for 12 years.

Right now, we have zero balances on anything, including my own primary. I'd been asking if I wanted to leave the small balance on an AU or on my one primary and you've answered that for me! I'll leave a $5 balance (>1%) on my primary.

I have the following negatives on my credit:

Charge-Off Credit Card > Shows as Revolving with $291 Balance > Should hit 7 years in September and be removed. Have letters in now requesting early exclusion or confirmation it will be off in September.

Medical Collection > Paid > 1.5 Years old > Trying the HIPAA removal method now that it's paid. Fingers crossed because that one is hurting. It's on TU and EX, which strangely enough are my 2 highest scores. I have been 700+ on mortgage scores in the last 60 days even with it showing.

CC Collection > $600 Balance > Scheduled to come off between September and Novemeber, can't get straight answer from EQ, which is the only CRA listing it. Already removed 2 months ago from EX and TU when I mentioned it.

I'm working under the assumption that I will have #1 and #3 removed very soon and that #2 is paid but I won't get it removed.

All other accounts are 100% clean, both primary and AU.

[Anonymous]

You sound like you have done your homework and are doing everything you need to do.  Smart man!

One small clarification: the $5 amount should give you a total utilization of 1% (that will be a U% that is < 1% and will therefore be rounded up to 1% by FICO).  You mentioned that your U would be > 1%, but will actually be considered by FICO as exactly 1%.  The exact dollar amount you choose isn't important, though there's been a few credit card issuers who report ultra tiny balances as $0, so I suggested at least $5 to be safe.  If you want to be hyper-vigilant, make sure that the dollar amount is $6 or more and < 9% of your card's credit limit.

Best of luck, pal!

[Revelate]

Wierd, I don't know why you aren't higher on a mortgage trifecta from what you posted other than I do have more and better installment history (your mortgage is an installment loan).  Do fix that account balance thing as CGD suggests, $0 across the board is a straight negative and that might be non-trivial though I don't think that explains a 690 completely even with the ancient negatives.

My own stats:

Paid collection from 2010

60 day late from 2010 (might not be hurting me now)

Paid tax lien from 2010 (sigh)

My oldest account even is only 7 years old at this point, and my AAOA is only 2 years.

720 tier on recent mortgage pull, even had scores up in the 730 range, Equifax was a crappy outlier at 700 meh heh, TU and EX liked me much better and near identical information on them.

Anyway I second CGD's comment: your game plan is solid, isn't a whole lot you can do from a mortgage perspective right now other than address the derogs and let that little balance show.