topic Re: AAoA question!? in General Credit Topics

AAoA question!?

Anonymous — Wed, 04 Jul 2012 05:45:17 GMT

Hello. I'm trying to figure out my AAoA, but am having some problems. I have a total of 4 open accounts (listed below) and 1 closed (auto loan) account. According to CreditKarma, my AAoA is 2yrs 10 months and my oldest tradeline is 3 years and 3 months. However, I took out the auto loan in December of 2007, so wouldn't my oldest tradeline be 4 years and 8 months, which would in turn increase my AAoa? Would love a reply. Thank you.

Auto Loan - December 2007 - paid off & closed

Dell Preferred Acct - March 2009

Citi CC - May 2009

Kohl's - May 2010

Amex - June 2012 (yay)

Re: AAoA question!?

Revelate — Wed, 04 Jul 2012 05:58:53 GMT

CK only calculates based on open accounts, FICO does both open and closed accounts. That's the source of your discrepancy though I didn't calculate it out by hand in your case.

Re: AAoA question!?

MarineVietVet — Wed, 04 Jul 2012 16:44:03 GMT

@Anonymous wrote:
Hello. I'm trying to figure out my AAoA, but am having some problems. I have a total of 4 open accounts (listed below) and 1 closed (auto loan) account. According to CreditKarma, my AAoA is 2yrs 10 months and my oldest tradeline is 3 years and 3 months. However, I took out the auto loan in December of 2007, so wouldn't my oldest tradeline be 4 years and 8 months, which would in turn increase my AAoa? Would love a reply. Thank you.

Auto Loan - December 2007 - paid off & closed
Dell Preferred Acct - March 2009
Citi CC - May 2009
Kohl's - May 2010
Amex - June 2012 (yay)

As Revelate said CK only uses open accounts to calculate AAoA but it's easy to do yourself. Your AAoA is the sum of the ages of every account (except CA collections and public records) on your report, whether open or closed, calculated in months, divided by the number of accounts and then divided by 12. I use the division by 12 to make it easier to convert into years. This is measured from the time each account was opened until present.

You can never have an AAoA of less than one year. This is built into the system.

You’ll need to figure the age of each account, open or closed, on each report. If all three reports are identical (very unlikely), you're in luck; otherwise, you'll need to run this for each report.

Re: AAoA question!?

Anonymous — Wed, 04 Jul 2012 18:44:28 GMT

@MarineVietVet wrote:
As Revelate said CK only uses open accounts to calculate AAoA but it's easy to do yourself. Your AAoA is the sum of the ages of every account (except CA collections and public records) on your report, whether open or closed, calculated in months, divided by the number of accounts and then divided by 12. I use the division by 12 to make it easier to convert into years. This is measured from the time each account was opened until present.

You can never have an AAoA of less than one year. This is built into the system.

You’ll need to figure the age of each account, open or closed, on each report. If all three reports are identical (very unlikely), you're in luck; otherwise, you'll need to run this for each report.

Thank you. I have just calculated my AAoA and it is 2 years and 8 months (went down 8 months due to the new Amex, but I don't mind). Do you think I should close my Kohl's card? It only has a $700 limit and I don't use it anymore. It's been open for 26 months. Apparently, if I close it, my AAoA goes up 1 month!? Can someone please help? I'm getting 161 months/5 = 32 months (or 2 yrs and 8 months). If the Kohl's gets closed, it goes down to 135 months/4 = 33 (rounded down). How could I possibly gain an extra month of AaoA for closing a 2 year old account? Thank you.

Auto Loan - 56 months
Dell - 40 months
Citi - 38 months
Kohls - 26 months
Amex - 1 month

Re: AAoA question!?

llecs — Wed, 04 Jul 2012 18:55:30 GMT

@Anonymous wrote:
@MarineVietVet wrote:
As Revelate said CK only uses open accounts to calculate AAoA but it's easy to do yourself. Your AAoA is the sum of the ages of every account (except CA collections and public records) on your report, whether open or closed, calculated in months, divided by the number of accounts and then divided by 12. I use the division by 12 to make it easier to convert into years. This is measured from the time each account was opened until present.

You can never have an AAoA of less than one year. This is built into the system.

You’ll need to figure the age of each account, open or closed, on each report. If all three reports are identical (very unlikely), you're in luck; otherwise, you'll need to run this for each report.

Thank you. I have just calculated my AAoA and it is 2 years and 8 months (went down 8 months due to the new Amex, but I don't mind). Do you think I should close my Kohl's card? It only has a $700 limit and I don't use it anymore. It's been open for 26 months. Apparently, if I close it, my AAoA goes up 1 month!? Can someone please help? I'm getting 161 months/5 = 32 months (or 2 yrs and 8 months). If the Kohl's gets closed, it goes down to 135 months/4 = 33 (rounded down). How could I possibly gain an extra month of AaoA for closing a 2 year old account? Thank you.

Auto Loan - 56 months
Dell - 40 months
Citi - 38 months
Kohls - 26 months
Amex - 1 month

OP, AAoA, per FICO, is the average age of ALL of your OC sccounts, whether reported opened or closed, good or bad. AAoA factors in open accounts, closed accounts, and even charge-offs. In essence, every TL in your Accounts page in your FICO report is factored into AAoA. AAoA does not include or factor in judgments or collection agencies. For scoring, FICO rounds down your AAoA in years to the nearest whole number. So, a 3 yr 11mo AAoA is really 3 years.

If you close any accounts, AAoA will not change.

Based on what you posted, AAoA = (56+40+38+26+1) / 5 = 32.2 months = 2 year AAoA. In about 3 or so months your AAoA will turn 3 assuming you don't lose or add any accts.

Re: AAoA question!?

DaveSignal — Wed, 04 Jul 2012 19:17:16 GMT

@Anonymous wrote:
How could I possibly gain an extra month of AaoA for closing a 2 year old account? Thank you.

A lot of people are giving mathematical ways to find AAoA and making this look complicated. The answer is NO, you do not gain an extra month (or lose a month) by closing any accounts. They are calculated exactly the same way, closed or open.

Re: AAoA question!?

Anonymous — Wed, 04 Jul 2012 19:45:25 GMT

@DaveSignal wrote:
@Anonymous wrote:
How could I possibly gain an extra month of AaoA for closing a 2 year old account? Thank you.

A lot of people are giving mathematical ways to find AAoA and making this look complicated. The answer is NO, you do not gain an extra month (or lose a month) by closing any accounts. They are calculated exactly the same way, closed or open.

This is very helpful. Closed accounts drop off in 10 years, is that correct? I'm still trying to determine if I should close the Kohl's or not. I'm guessing if the closed account dropped off in 10yrs, it would affect AAoA, but what you said makes perfect sense.

Re: AAoA question!?

DaveSignal — Wed, 04 Jul 2012 20:17:54 GMT

As far as AAoA, It doesn't matter if you close Kohl's or leave it open. 10 years is a long time. In that amount of time all of your current open accounts will still be calculated toward AAoA plus any new accounts opened in that time span. IMO, you won't even notice in 10 years when Kohl's drops off the report.

It will effect your overall credit limit, however, which could lower your utilization % across all cards. Why do you want to close it? Is it charging you fees? Is it preventing you from acquiring a different better card? You could just take it out of your wallet and stop using it.

Re: AAoA question!?

pizzadude — Wed, 04 Jul 2012 20:47:14 GMT

I'm generally in favor of leaving cards with no AFs alone, like Dave mentioned you can just stick it in your sock drawer.

Re: AAoA question!?

Anonymous — Wed, 04 Jul 2012 21:34:08 GMT

@DaveSignal wrote:
As far as AAoA, It doesn't matter if you close Kohl's or leave it open. 10 years is a long time. In that amount of time all of your current open accounts will still be calculated toward AAoA plus any new accounts opened in that time span. IMO, you won't even notice in 10 years when Kohl's drops off the report.

It will effect your overall credit limit, however, which could lower your utilization % across all cards. Why do you want to close it? Is it charging you fees? Is it preventing you from acquiring a different better card? You could just take it out of your wallet and stop using it.

Thanks for the input. It has a $700 limit, while my 2 other accounts have $10k and $2,500. I never have utilization show up on reports because I like to PIF before the statements cut. The reason for closing is because I don't really shop there anymore. However, I'm going to take your advice and put it in a drawer. And if they want to close it due to inactivity, that is fine by me. BTW, this forum is very very helpful and I'm very appreciative of it!

Re: AAoA question!?

JonRun — Thu, 05 Jul 2012 09:21:24 GMT

So, if I opened an account in June 2008 and paid if off/closed it in June 2010, would the age of that account be 4 years? Or just the 2 years the account was open?

Re: AAoA question!?

Anonymous — Thu, 05 Jul 2012 13:09:48 GMT

The age of that account would be 4 years. It starts from when it was opened and continues to increase until it falls off your record, which is ~10 years after the account was closed. So that account when it drops off would have an age of ~14 years.

Re: AAoA question!?

JasonBourneOfCredit — Fri, 06 Jul 2012 19:44:53 GMT

@Revelate wrote:
CK only calculates based on open accounts, FICO does both open and closed accounts. That's the source of your discrepancy though I didn't calculate it out by hand in your case.

THANKS! This is super helpful. I was wondering why my CK AAoA was so low.