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Super Contributor
Posts: 6,122
Registered: ‎09-18-2007
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How do we compute AAoA

It is my understanding the paid accounts drop off from the report after 10 years from the last transaction.

Negative information will fall off CRA in 7 years from the last transaction.

How do we compute AAoA. is there a worksheet or template that we can use to compute the changes in AAoA due to the accounts falling off from the report?

Valued Contributor
Posts: 4,150
Registered: ‎04-11-2016
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Re: How do we compute AAoA

[ Edited ]

Add up the ages of all of your accounts on your credit report, open or closed.  Divide that number by the total number of accounts you just added up.  Take your answer and remove any decimal, that is take just the whole number before the decimal and that is your AAoA.

 

Example:  You have 3 open accounts and 4 closed accounts on your credit report.  Their ages are 1 year, 10 years, 8 years, 5 years, 5 years, 2 years and 3 years.  Adding up their ages gives you 34 years, divided by the 7 total accounts  = 4.85 years.  Drop the decimal, AAoA = 4 years.  In 2 months time, your AAoA would cross to 5.03 or so meaning in 2 months AAoA would increase from 4 years to 5 years.

 

Hopefully that makes sense!

 

I know a few guys on the forum have spreadsheets that they use, but I just go with the good old calculator and in a few minutes can figure it out.  Also different monitoring software like Credit Check Total for example will do the figuring for you and give you your AAoA. 

Super Contributor
Posts: 6,122
Registered: ‎09-18-2007
0

Re: How do we compute AAoA

Thank you. I figured out a way to prepare the spread sheet. Now next question is how does the account falling off is going to happen and how it affects the scores.

Established Contributor
Posts: 646
Registered: ‎04-25-2015
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Re: How do we compute AAoA

I've never been able to figure out when closed accounts fall of my reports. I have a couple closed accounts on my reports that are 13 years old and another one that closed about 25 years ago still shows up on my Experian report. ~ shrug ~

Valued Contributor
Posts: 4,150
Registered: ‎04-11-2016
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Re: How do we compute AAoA


concorduser wrote:

Thank you. I figured out a way to prepare the spread sheet. Now next question is how does the account falling off is going to happen and how it affects the scores.


 

An single account falling off usually won't impact it much.  Obviously the fewer total accounts, the more any single account will impact AAoA.

 

In my earlier example with the AAoA of 4 years, let's consider what happens if the oldest account of 10 years falls off.  Remember, this is with 7 total accounts.  Instead of 34 total years divided by 7 accounts we have 24 total years (we removed the 10 year account) divided by 6.  24 divided by 6 equals 4, so AAoA remains unchanged in the eyes of FICO scoring and with this profile there would be no change in credit score.

 

Now, since we're talking 4.0 verses 4.85 (both scored as "4" under FICO scoring) it will take a full year to hit a 5 year AAoA as opposed to 2 months had that 10 year old account not fallen off.  So, basically, in this example it would take 10 months longer to see a potential AAoA scoring increase, but there would be absolutely zero scoring decrease due to this 10 year old account dropping off.

Valued Member
Posts: 49
Registered: ‎09-15-2016
0

Re: How do we compute AAoA

What about Authorized User accounts... are they included in the AAoA calculation?

Valued Member
Posts: 76
Registered: ‎02-23-2017
0

Re: How do we compute AAoA

[ Edited ]

Do I include my electric company? I have an open and closed account with them that report.

Valued Contributor
Posts: 4,150
Registered: ‎04-11-2016
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Re: How do we compute AAoA


HeavenOhio wrote:

Do I include my electric company? I have an open and closed account with them that report.


If it's an account on your report it would count in AAoA, where if it's just an inquiry it wouldn't.

Valued Member
Posts: 76
Registered: ‎02-23-2017
0

Re: How do we compute AAoA

[ Edited ]

BrutalBodyShots wrote:

HeavenOhio wrote:

Do I include my electric company? I have an open and closed account with them that report.


If it's an account on your report it would count in AAoA, where if it's just an inquiry it wouldn't.


It reports monthly.

 

Anyway, given this…

 

  • Account 1 (open): Opened May 2014
  • Account 2 (closed): Opened July 2014, Closed September 2014

 

Do I simply count the age of each account as two years?

 

What about accounts that have been open less than a year?

Valued Contributor
Posts: 4,150
Registered: ‎04-11-2016
0

Re: How do we compute AAoA

Good question.  When you count the age of each individual account, use decimals.  Decimals are not however used for the final number with respect to FICO scoring.  If your final number is 4.85 years, your AAoA IS in fact 4.85 years, but FICO will only score it as 4 years as that's the whole number without the decimal.  It won't "round up" it's that the decimal drops off.  In adding up your accounts though, you'd be using decimals. 

 

So in your example you'd be using 2.75 years for Account 1 and 2.58 years for Account 2.

 

Accounts that have been opened for less than a year, take the number of months that it's been opened and divide by 12.  So, a 5 month old account would be .42 years.

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