Understanding FICO® Scoring

[ilovepizza]

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ilovepizza wrote:
Question. If I have 1 credit card from 9 years ago that was open for 2 months, does that add 2 months in to average age or 9 years?

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Do you know about how average is added up? Time open, or date opened? Wondering how closed accounts are calculated since they would have been open less time from start till now. Thanks

[smallfry]

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ilovepizza wrote:

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ilovepizza wrote:
Question. If I have 1 credit card from 9 years ago that was open for 2 months, does that add 2 months in to average age or 9 years?

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Do you know about how average is added up? Time open, or date opened? Wondering how closed accounts are calculated since they would have been open less time from start till now. Thanks

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The account stays on your reports ten years from date of closure. So if you open an account tomorrow and it reports a month or two it still counts towards the aging of accounts. In five years that account will show five years plus two months of age. closing an account does not kill the history but it freezes the potential age at the age at closure plus ten years. It is possible a CRA will remove it early but ideally closing an account does not hurt your history and as long as you don't need it for utilization and it is a low credit limit it might be wise to dump subprime cards as you move along. I don't think they look good on your reports and new creditors might be disposed to give you low credit limits if you show too many of these toy cards. My opinion.

[ilovepizza]

Then it would be the start date that determines the average age and even a closed accounts grows in age until it is removed from your CR, if I read this correctly.

I just added up all my closed accounts and compared them to all my open accounts and my average was the same give or take a few months. However when I add up old accounts from from when they were open to closed my average drops 1 year. :-) Glad to hear they keep aging. :-)

Message Edited by ilovepizza on 08-28-2007 06:59 PM

[ilovepizza]

Wow. One would really need to have "very old" credit file to maintain a thick file with lots of accounts and not drop below 10 years. Their CR file would need to be around 30 years old.

[smallfry]

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ilovepizza wrote:
Wow. One would really need to have "very old" credit file to maintain a thick file with lots of accounts and not drop below 10 years. Their CR file would need to be around 30 years old.

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Experian has me on file since 1976. That's the year I got my first credit card. Now if I hadn't gone brain dead and got all jammed up and went BK in 2000 my file would be over 30 years old today. You can easily get into the 800's with less than 20 years history if you never pay late. Pay online and make sure you always pay on time.

[pepper06]

Hey guys, I have a question, If I had opened a new CC account My Average age is about three yrs & change, my oldest account opened 7 yrs ago,my Ex:698. Now, should I expect a score increase because of the 7k TL? "My credit to debt ratio" has increased, or will it Decrease because My age is going to be shorten?

[cheddar]

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pepper06 wrote:
Hey guys, I have a question, If I had opened a new CC account My Average age is about three yrs & change, my oldest account opened 7 yrs ago,my Ex:698. Now, should I expect a score increase because of the 7k TL? "My credit to debt ratio" has increased, or will it Decrease because My age is going to be shorten?

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Unfortunately, there's not enough information to answer your question.  The short answer is that the new account will hurt your average age, but will help your utilization.  The effect on your score will depend on which effect is greater.

To know how much it will hurt your average age we would need to know how many accounts you have as well as the age of each individual account.  Just knowing your current average age doesn't help.

To know how much it will help your utilization, we'd have to know your current balances and CLs.  Just knowing the fact that the new CL is $7K doesn't help here, either.

Message Edited by cheddar on 03-23-2008 09:10 PM

[smo65d11]

To clarify, any item that shows on my credit report counts towards AAoA, correct?

Even closed accounts?  What is an account was open 5 years ago for 6 months.  When I am working out my AAoA, would I add the months in, but then NOT the original year?  I'm confused!

[smallfry]

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smo65d11 wrote:

To clarify, any item that shows on my credit report counts towards AAoA, correct?

Even closed accounts?  What is an account was open 5 years ago for 6 months.  When I am working out my AAoA, would I add the months in, but then NOT the original year?  I'm confused!

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As Tuscani stated at the beginning of this thread ALL tradelines count. I assume that to mean public records and collections as well. All means all.

[llecs]

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smallfry wrote:

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smo65d11 wrote:

To clarify, any item that shows on my credit report counts towards AAoA, correct?

Even closed accounts?  What is an account was open 5 years ago for 6 months.  When I am working out my AAoA, would I add the months in, but then NOT the original year?  I'm confused!

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As Tuscani stated at the beginning of this thread ALL tradelines count. I assume that to mean public records and collections as well. All means all.

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All except for CAs and PRs.