Average Account Age Inquiry

[Anonymous]

Hello.

I have 4 accounts open in total and all are resolving, my oldest one was oppend on 11/2006 then I have:

1 = 11/2006

2 = 08/2007

3 = 12/2007

4 = 03/2008

When I open the last one I didnt know how the average age system worked, and I really dont need these credit card since is a store credit card, If I cancel this card will my average age will go up and if so will it raise my score ? or it will be worse if I close it ?

as of now:

Length of Credit History: 1 Years, 5 Months
Average Account Age: 0 Years, 8 Months

Thanks

Message Edited by Ongi on 04-14-2008 11:21 AM

[Anonymous]

Your AVG age is based on open and closed accounts-

Closing accounts will not improve your avg age.

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Ongi wrote:

Hello.

I have 4 accounts open in total and all are resolving, my oldest one was oppend on 11/2006 then I have:

1 = 11/2006

2 = 08/2007

3 = 12/2007

4 = 03/2008

When I open the last one I didnt know how the average age system worked, and I really dont need these credit card since is a store credit card, If I cancel this card will my average age will go up and if so will it raise my score ? or it will be worse if I close it ?

as of now:

Length of Credit History: 1 Years, 5 Months
Average Account Age: 0 Years, 8 Months

Thanks

Message Edited by Ongi on 04-14-2008 11:21 AM

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[RobertEG]

Hi Onji, and welcome.

Closing those new accounts is generally a no-no, unless you have fees on them that you dont want to pay..  Those are the foundation of your further credit history.  As each is paid on time each month, you are building a history of timely payments.  the biggest part of your FICO score.

Payment history is 35%, util of credit (%util of CL and account balances) is 30%.  Length of credit history is only 10% of FICO, and not something you can do anything about except to get real old!

The iimpact now is minimal.  But ten years from now, when you have a shot at the FICO high-tier brackets, if you were to close those accounts now, they would drop from your CR 10 years after closing them, and that is where you will lose their average history. If you keep them, you will retain their history after the normal ten year drop off period.

Meanwhile, you wont get a boost for avg account age for about five more years, so just enjjoy life.

YOur FICO score now is building.  Pay each account on time.  You have built a revolving credit base.  Keep it.

I would be more concerned, IMHO, about considering improving my credit mix (10% of FICO) by maybe getting an installment loan, such as that fancy new car, if budget can handle it.  Just dont be obsessed by FICO now, for you are, with all due respect, a credit newbie based  on your length of accounts.  If you read this site, and follow the guidance, keep % util low, never pay late, and maybe get an installment account, that is where your FICO growth appears to be.  Not it closing your foundation of revolving payment history.

Message Edited by RobertEG on 04-14-2008 09:34 PM

[momof2]

i have a ? about average age of accounts. I have a car loan that i opened in 12/2003, i am due to pay it off next month(7months early to free up money to save for a down pymt for a house), if closing accounts hurts your score, how bad of an inpact will my score get for this account being paid off and closed(it is listed as an installment)

And will my average age drop also?

[RobertEG]

No, your average age will not drop. but your credit mix will.  ONce you close an installment loan, it no longer counts in your credit mix, so from what you have posted, this will leave you with only revolv credit in your mix.

But the most important thing for you to consider is not FICO score, unless you need it in the next few months to apply for new credit.  Otherwise, put your $$ into reducing monthly interest, and forget FICO loss of the installment.  It will come, and you will go on.  It is just a number unti actually apply for new credit. 

Always remember that a short term strategy to improve FICO, if you dont need it, at the expense of money in your pocket by reducing interest paid, is a contradictory strategy.

Message Edited by RobertEG on 04-15-2008 03:34 AM

[momof2]

robert--- i think i got the idea of your 1st paragradh but i am not sure i quite understand what your saying in the other :::

                  (Always remember that a short term strategy to improve FICO, if you dont need it, at the expense of money in your pocket by reducing interest paid, is a contradictory strategy)?

B/C this car loan will be PIF and no longer reporting and only have the 2 CC's to be reporting i plan to pay those down and only use enough to report a small balance, this id not going to help my score by any means( at this point i have more vlosed accts then i do open accts, this cant be good for FICO).

Until we buy a house which wont be till most likely end of 2009 to save enough money for a down(1st time homebuyer here) should i consider getting a personal loan of $1 or 2K to have something reporting, or will having my CC's be enough?