topic Re: Please Explain to me Ultization and AAoA in Credit Cards

Please Explain to me Ultization and AAoA

JMills — Thu, 27 Jun 2013 17:58:21 GMT

I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.

Re: Please Explain to me Ultization and AAoA

myjourney — Thu, 27 Jun 2013 18:17:52 GMT

@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? It helps to have high limit cards for UTL purposes but not mandatory you can still achieve the same goals with smaller limits

If I have low limits, will that affect me in the long run, when apping for new cards? While banks like to sometimes match other lenders to gain your business at some point in your credit history someone will give you a higher limit based on your CR, scores and credit history.

What will you suggest I do? Continue building a positive history with the cards you have keeping them at 1-9% UTL for 6-12 months and app the next level up of the card of your choice (after researching the requirements needed to obtain that card)

In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right. Each month / year w/o any new apps for credit your AAoA increases by a month ....Example if you don't appy for any credit for 1 year your AAoA increases by 12 months /1 year. If you apply for cards your AAoA then is decreased. If you search AAoA on the boards there's a formula that will explain further

Re: Please Explain to me Ultization and AAoA

CS800 — Thu, 27 Jun 2013 21:55:05 GMT

@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.

AAoA:

The average age of all your accounts as the acronym states. Take the age of all your accounts and divide them by the number of account = AAoA

Example:

Account 1 : 2 yrs

Account 2: 4 yrs

Account 3: 6 yrs

AAoA = (2+4+6)/3 = 4 yrs

The higher the AAoA, the better it is. If it's a decimal, FICO will most likely take the lowest round number.

Util:

- Take all your credit limits and add them

- Add all the credit that you are using from your cards

- Take the total amount of $$ used divide by the total credit limit X 100 gives you util %

The lower the util, the better. Generally from what I have read and understood, to keep util below 10% (YMMV)

Example:

Card 1: CL 1000, using 100

Card 2: CL 2000, using 200

Card 3: CL 3000, using 300

Util % = [(100+200+300) / (1000+2000+3000) ] X 100 = 10%

Low limits will affect your util % if you're using a lot of the available credit limit. If you pay them in full before the statement cuts, it will not affect your util.

The key to improve credit is:

- Pay everything on time

- Don't app for anythnig unless you need it (this will create hard inqs as well as may lower your AAoA significantly; unless you can have an AMEX backdated)

- Let your accounts age

- Don't let your cards report with high util

- Did I say pay everything on time?

Re: Please Explain to me Ultization and AAoA

armbenderc — Thu, 27 Jun 2013 18:29:37 GMT

@CS800 wrote:
@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.
AAoA:

The average age of all your accounts as the acronym states. Take the age of all your accounts and divide them by the number of account = AAoA

The higher the AAoA, the better it is

Util:

- Take all your credit limits and add them
- Add all the credit that you are using from your cards
- Take the total amount of $$ used divide by the total credit limit X 100 gives you util %

The lower the util, the better. Generally from what I have read and understood, to keep util below 10% (YMMV)

Low limits will affect your util % if you're using a lot of the available credit limit. If you pay them in full before the statement cuts, it will not affect your util.

The key to improve credit is:

- Pay everything on time
- Don't app for anythnig unless you need it (this will create hard inqs as well as may lower your AAoA significantly; unless you can have an AMEX backdated)
- Let your accounts age
- Don't let your cards report with high util
- Did I say pay everything on time?

Well said, someone on here also said to remember the 3 Ps

Pay on time,

Pay before statement cut,

Pay in full.

Re: Please Explain to me Ultization and AAoA

oscar_actuary — Thu, 27 Jun 2013 18:53:20 GMT

@myjourney wrote:
@JMills wrote:
In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right. Each month / year w/o any new apps for credit your AAoA increases by a month ....Example if you don't appy for any credit for 1 year your AAoA increases by 12 months /1 year. If you apply for cards your AAoA then is decreased. If you search AAoA on the boards there's a formula that will explain further

Are you saying AAoA is impacted by just apping, even if you are denied?

I can see it making sense either way but I was not thinking that way.

Re: Please Explain to me Ultization and AAoA

myjourney — Thu, 27 Jun 2013 18:57:16 GMT

@oscar_actuary wrote:
@myjourney wrote:
@JMills wrote:
In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right. Each month / year w/o any new apps for credit your AAoA increases by a month ....Example if you don't appy for any credit for 1 year your AAoA increases by 12 months /1 year. If you apply for cards your AAoA then is decreased. If you search AAoA on the boards there's a formula that will explain further

Are you saying AAoA is impacted by just apping, even if you are denied?
I can see it making sense either way but I was not thinking that way.

No only approvals INQ's do not effect AAoA

Re: Please Explain to me Ultization and AAoA

JMills — Thu, 27 Jun 2013 19:10:33 GMT

Omg thank you, its more clear now. What is better A good utilization or good AAoA? Or should I strive for both

Re: Please Explain to me Ultization and AAoA

myjourney — Thu, 27 Jun 2013 19:11:15 GMT

@JMills wrote:
Omg thank you, its more clear now. What is better A good utilization or good AAoA? Or should I strive for both

Both

Re: Please Explain to me Ultization and AAoA

JMills — Thu, 27 Jun 2013 19:23:53 GMT

MY AAoA is average is 8 years. I need to work bringing down my utilization rate

Re: Please Explain to me Ultization and AAoA

Anonymous — Thu, 27 Jun 2013 19:36:52 GMT

@JMills wrote:
MY AAoA is average is 8 years. I need to work bringing down my utilization rate

8 years is pretty good, most here have shorter AAoA. Obviously depends on circumstances, but in general utilization is "easier" to fix as there is no history, once you reduce the balance showing on card(s) that month, the utilization is immediately lower, never mind what happened in the past. AAoA is only increased over time, and by not getting new cards (except Amex) and Amex backdating..

Re: Please Explain to me Ultization and AAoA

JMills — Thu, 27 Jun 2013 20:06:08 GMT

My current utilization is 39.6, thanks. I created a formula, to keep myself to track with these figures

Re: Please Explain to me Ultization and AAoA

JMills — Thu, 27 Jun 2013 20:11:22 GMT

32.61 I just did again, not bad!

Re: Please Explain to me Ultization and AAoA

jenn_bar — Thu, 27 Jun 2013 20:24:10 GMT

@armbenderc wrote:
@CS800 wrote:
@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.
AAoA:

The average age of all your accounts as the acronym states. Take the age of all your accounts and divide them by the number of account = AAoA

The higher the AAoA, the better it is

Util:

- Take all your credit limits and add them
- Add all the credit that you are using from your cards
- Take the total amount of $$ used divide by the total credit limit X 100 gives you util %

The lower the util, the better. Generally from what I have read and understood, to keep util below 10% (YMMV)

Low limits will affect your util % if you're using a lot of the available credit limit. If you pay them in full before the statement cuts, it will not affect your util.

The key to improve credit is:

- Pay everything on time
- Don't app for anythnig unless you need it (this will create hard inqs as well as may lower your AAoA significantly; unless you can have an AMEX backdated)
- Let your accounts age
- Don't let your cards report with high util
- Did I say pay everything on time?
Well said, someone on here also said to remember the 3 Ps

Pay on time,
Pay before statement cut,
Pay in full.

I would also suggest paying your balance multiple times a month--especialy starting up. This nearly jumped my credit up 50 points within a few months once I started doing this. It is also what you must do in order to keep your utilization down if you have a small credit limit.

For example, my first card was a Chase Freedom for $2.5k. Putting all my expenses on that monthly, I would nearly reach the top. After reading that tip, I paid in full whatever balance was showing online every 4-5 days. That way, most of the time, Chase would report my balance at ~$50/month. With a $2.5k limit, thats nearly 2% utilization. From this history, I've been given 15k CL in just Chase credit cards alone.

Re: Please Explain to me Ultization and AAoA

Anonymous — Thu, 27 Jun 2013 20:29:19 GMT

@jenn_bar wrote:
@armbenderc wrote:
@CS800 wrote:
@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.
AAoA:

The average age of all your accounts as the acronym states. Take the age of all your accounts and divide them by the number of account = AAoA

The higher the AAoA, the better it is

Util:

- Take all your credit limits and add them
- Add all the credit that you are using from your cards
- Take the total amount of $$ used divide by the total credit limit X 100 gives you util %

The lower the util, the better. Generally from what I have read and understood, to keep util below 10% (YMMV)

Low limits will affect your util % if you're using a lot of the available credit limit. If you pay them in full before the statement cuts, it will not affect your util.

The key to improve credit is:

- Pay everything on time
- Don't app for anythnig unless you need it (this will create hard inqs as well as may lower your AAoA significantly; unless you can have an AMEX backdated)
- Let your accounts age
- Don't let your cards report with high util
- Did I say pay everything on time?
Well said, someone on here also said to remember the 3 Ps

Pay on time,
Pay before statement cut,
Pay in full.

I would also suggest paying your balance multiple times a month--especialy starting up. This nearly jumped my credit up 50 points within a few months once I started doing this. It is also what you must do in order to keep your utilization down if you have a small credit limit.

For example, my first card was a Chase Freedom for $2.5k. Putting all my expenses on that monthly, I would nearly reach the top. After reading that tip, I paid in full whatever balance was showing online every 4-5 days. That way, most of the time, Chase would report my balance at ~$50/month. With a $2.5k limit, thats nearly 2% utilization. From this history, I've been given 15k CL in just Chase credit cards alone.

The important thing is that the balance when reported is as low as possible, it doesn't matter whether you achieve this in one payment or multiple. But, as in your experience, it may be necessary to do this if the CL is very small. But your credit score should be the same, however you reach the reported balance.

Re: Please Explain to me Ultization and AAoA

HYPASS33 — Thu, 27 Jun 2013 20:49:51 GMT

Get it down to 1-9% and see the difference in your score. I think seeing the difference will make you strive every month to keep it as low as possible.

Re: Please Explain to me Ultization and AAoA

Anonymous — Thu, 27 Jun 2013 21:07:39 GMT

@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.

Your AAoA is based on ALL OC accounts, open, closed, good or bad.

To find the average, go by months. Add up all the accounts in months from the date opened to the date closed, if it is closed. If they are still open, from the date opened to the current month. When all are added, divide by the number of accounts and convert back to years.

And I believe FICO rounds down.

Re: Please Explain to me Ultization and AAoA

Revelate — Fri, 28 Jun 2013 05:34:17 GMT

@Anonymous wrote:
@JMills wrote:
I'm still learning and I'm still need some information on utilization and AAOa, is it good to have high credit limits on all your cards? If I have low limits, will that affect me in the long run, when apping for new cards? What will you suggest I do? In rebuilding stage. My longest card is 7 years, explain the whole AAoA process please, so I can do this right.
Your AAoA is based on ALL OC accounts, open, closed, good or bad.

To find the average, go by months. Add up all the accounts in months from the date opened to the date closed, if it is closed. If they are still open, from the date opened to the current month. When all are added, divide by the number of accounts and convert back to years.

And I believe FICO rounds down.

For AAoA FICO does round down to the year, with a minimum of one year regardless of AAoA calculation. I'm getting nice an comfy at my one year mark, which I won't get out of until I turn two.

Think that's going to be worth getting into a good bottle of scotch over .

Re: Please Explain to me Ultization and AAoA

leegreen — Thu, 15 May 2014 12:35:25 GMT

Reviving a thread from last year...

As far as AAoA goes does anybody know what the levels are? I see it seems to only help you for each year. Where are the big gains or do they just jump by approximately the same amount each full year? For instance my AAoA was over 4 years... then I went on a credit spree to reduce my overall interest rates and gain CC's and CLI's to help my overall utilization... I am now less than 3 years, do I get as good of a score gain when I pass 3 again as I will get when I pass 4?