topic Re: AAoA vs Inquiry in Understanding FICO® Scoring

AAoA vs Inquiry

Anonymous — Fri, 26 Oct 2018 21:04:03 GMT

Let me preface by saying I do not pretend to have an understanding of the complexities of fico scoring. Additionally, I have very few HPs, one on EX and one on TU, and a longish (8+ year) AAoA.

I see many people on here who are obsessed with avoiding hard pulls. Isn't the bigger issue for your overall score the reduction in AAoA when adding new credit lines? My hesitation with applying for new credit is lowering the AAoA, am I looking at this incorrectly?

Re: AAoA vs Inquiry

dragontears — Fri, 26 Oct 2018 21:12:34 GMT

I don't think you are looking at it incorrectly, mainly because my view is that the largest "hit" to a score is the new account not the HP and any account worth getting is worth the HP.
The effect/importance of HP is generally overrated on this forum most of the time

Re: AAoA vs Inquiry

Anonymous — Fri, 26 Oct 2018 21:46:15 GMT

@Anonymous wrote:
Let me preface by saying I do not pretend to have an understanding of the complexities of fico scoring. Additionally, I have very few HPs, one on EX and one on TU, and a longish (8+ year) AAoA.

I see many people on here who are obsessed with avoiding hard pulls. Isn't the bigger issue for your overall score the reduction in AAoA when adding new credit lines? My hesitation with applying for new credit is lowering the AAoA, am I looking at this incorrectly?

Well...not entirely. The larger issue, in my opinion, is the penalty incurred by resetting your Age of Youngest Account to zero by adding a new account. A new account penalizes you in at least two ways (i) reducing your Average Age of Accounts, and (ii) resetting the AoYA to 0.

For someone with an AAoA of 8 years, adding a new account shouldn't reduce your AAoA significantly (this, of course, depends on the denominator or how many accounts you have). There appears to be a threshold where you're penalized if your AAoA falls below 2 years so that should be avoided.

Lowering your AoYA penalizes you for at least one year until the account is no longer considered new and the "new account" reason code is removed from your credit scores.

Depending on your credit profile and whether you have a "thick" file, an inquiry costs between 0-5 points which are usually recovered within 6 months and the inquiry becomes unscoreable after a year although it remains on your credit report for 2 years.

Re: AAoA vs Inquiry

Anonymous — Sat, 27 Oct 2018 07:25:58 GMT

It all depends on the profile.

If someone has a thick file with an AAoA of over (say) 10 years, the addition of even a spree of new accounts isn't going to lower AAoA below 7.5 years, meaning it wouldn't impact score at all. If this person had already opened an account relatively recently and their AoYA was 3 months for example pre-spree, the only factor that would adversely impact their score would be the inquiries from the spree.

Conversely, if someone has a thin file and an AAoA of under 7.5 years and their AoYA is > 12 months, the AoYA reset to 0 months and the AAoA drop across a threshold or thresholds will be more impactful than the inquiries.