Account Age - Does It Vary by Account Type

[laz98]

Do collection accounts & car loans (installment accounts) get the same age bump every year that credit cards (revolving accounts) do on their birthdays/anniversaries, or is that only the first year, or only for credit cards?

trying to figure out how stuff will age on my report & on my gf's. thanks for any help!

[Junejer]

Well, kinda/sorta. Collection accounts don't get an age bump, per se, as it's not a positive TL, but the effect lessens annually. Installment loans age just like revolving debt.

[laz98]

also, these age bumps.....i've heard they affect what "bucket" you are in.  one of them is at 5 years, right?  does that mean ALL of your accounts have to be 5 years old or more?  or as long as at least one of them is over 5 years?

[haulingthescoreup]

Two different things: There's your oldest account on your reports, whether open or closed, and there's the average age of accounts (AAoA). Both are looked at, which is why sometimes you can get a positive and a negative for age on one report.

For instance, my oldest account is over 19 years, but my AAoA is 3 years 9 months, I think it is, so I get points for the old account and lose points for sending my AAoA back into the diapers stage.

To calculate AAoA: figure out how old in months all of your reported accounts are. Add up all these ages and divide by the number of accounts. This gives you your AAoA in months. Divide by 12 to get it into years and months. A simpler way is to sign up for Equifax's Credit Watch Gold, with unlimited daily pulls of your EQ report, and they calculate it for you.

AAoA does show on your myFICO reports, but it's only reported in years. So an AAoA of 3y 1m and an AAoA of 3y 11m will both display as 3 years.

So to answer your question (finally!) for oldest account, it's once at least one is 5 years old or more, and for AAoA, it's when that figure hits 5 years.

[laz98]

thanks, hauling, for that STELLAR answer!  i really appreciate it

[RobertEG]

Hi laz,

A trade line (TL) is an account with the OC only, and only TLs are used to compute oldest account and avg age of accounts.

CA accounts are not included as TLs

Aging of CA accounts is scored under the totally different FICO category of payment history, and not length of credit history.  They are a major derog, and only deeriorate at 1-2 pts per month.

[laz98]

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@RobertEG wrote:

Hi laz,

A trade line (TL) is an account with the OC only, and only TLs are used to compute oldest account and avg age of accounts.

CA accounts are not included as TLs

Aging of CA accounts is scored under the totally different FICO category of payment history, and not length of credit history.  They are a major derog, and only deeriorate at 1-2 pts per month.

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hi robert!

1-2 pts per month.........until when?  i assume this effect lessens with time.  what about charge-offs?

[RobertEG]

Both a CA and CO are major delinquencies.  They remain until 7 1/2 years from the DOFD reported by the OC, then they go away.

Their impact puts you in the "dirty file" bucket of the ten FICO scoring algorithms. No one can give you exact numbers on their impact over time, as the FairIsaac scoring algoithms are closely held trade secrets.  I base my estimates on anecdotal experience, and not on hard data.

Major derogs dont deteriorate rapidly. 

[laz98]

unfortunately, i'm stuck in that "dirty file" bucket for at least a while longer.....my COs are only 2 years old.  well, i should only have one soon, since i'm about to kick verizon right off my EQ report.  they haven't even bothered to report since 12/2006.

i'm hoping that my scores will still go up just a little when my oldest account hits 5 years.  but i'm thinking of closing it, because of the $10 monthly fee...not really sure what to do.