Good utilization vs. Bad account age

Anonymous · ‎02-13-2009

Which wins in this conflict:

I want to add my wife as an AU on one of my newer, zero balance, higher CL accounts. I am concerned only about the short-term score hit, not the long term.

The account is 3 years old, and adding it on would change her AAoA from 5 years to 4.8 years.

It has a 7000 CL, and would lower her total utilization from 28% to 25%.

Which would win, the worse age or the better utilization?

-Peter

Message Edited by PeterKeilman on 02-13-2009 01:09 PM

Message Edited by PeterKeilman on 02-13-2009 01:10 PM

llecs · ‎02-13-2009

It would likely drop her score because of the AAoA. FICO reads whole numbers per AAoA so she drops from 5 to 4. Moreover, a 3% downtick in utilization in the 20% range won't help, possibly at all. Though in 3-4 months, her scoure could rebount when AAoA hits 5 yrs.

Anonymous · ‎02-13-2009

I didn't know about the whole number counting in AAoA. I'll keep that in mind, and redo the numbers.
By the way, is AAoA calculated on all open and closed accounts, on all types ( mortgage, installement, revolving)?
-Peter

llecs · ‎02-13-2009

PeterKeilman wrote:
I didn't know about the whole number counting in AAoA. I'll keep that in mind, and redo the numbers.
By the way, is AAoA calculated on all open and closed accounts, on all types ( mortgage, installement, revolving)?
-Peter

Right. Open, closed, good, and bad. It includes all accounts except for collection agencies and public records.

Anonymous · ‎02-17-2009

I've redone the numbers. I've learned that the AAoA applies to all accounts, including closed accounts. My wife has lots of closed student loan accounts that have been consolidated. Those are keeping her AAofA pretty much fixed at about 6 years. I don't think the AAoA will drop by much, not enough to trigger a different whole number AAoA. Can't change it!

So it comes down to utilization. Extra utilization can't hurt, so I'm going for it!

Thanks,

Peter

smallfry · ‎02-17-2009

If that is the case then explain why some people lose points when an old BK or collection drops off their reports. I think everything is counted towards AAofA.

Anonymous · ‎02-17-2009

Smallfry- I was just referring to my individual situation about AAoA. My wife has lots of closed accounts that won't be dropping off for a while, so her AAoA won't change much for quite some time. Once they get a lot older, they will drop off, but I'm only concerned about the short term impact right now.

Junejer · ‎02-17-2009

smallfry wrote:
If that is the case then explain why some people lose points when an old BK or collection drops off their reports. I think everything is counted towards AAofA.

Bucket change. Their scores had a ceiling on it with the baddie, now it is being compared to others in a different bucket, with better overall profiles.