topic Re: Age of Credit in General Credit Topics

Age of Credit

Anonymous — Fri, 18 Mar 2016 15:25:33 GMT

So I have had accounts report to the CRB since 2008-2009, but when I pull my report its saying thr avg age is like 1yr 7 mon.

Is there anyway to get that fixed?

Re: Age of Credit

RobertEG — Fri, 18 Mar 2016 17:39:10 GMT

Avg age is the sum of the age of ALL accounts, open and closed, divided by the total number of accounts.

You also have the age of the OLDEST account, which is a separate scoring item.

Length of credit history is a combination of average age and oldest, with possible additional adjustment if you have very new accounts.

Re: Age of Credit

sydney449 — Thu, 14 Apr 2016 16:29:11 GMT

Can Age of Credit be improved somehow?

Re: Age of Credit

RobertEG — Thu, 14 Apr 2016 16:53:55 GMT

Age of accounts calculations, both for the oldest account and for the average age of accounts, suffers from two major factors that often leads to problems beyond the control of the individual consumer.

First, any given creditor can decide at any time to delete their account, which removes it entirely from scoring. That applies to both open and closed accounts, but is more common with closed accounts.

Second, the CRAs have an arbitrary policy of deleting old accounts once they reach approx ten years from date closed.

They assume that by that point they are no longer of use to other creditors in that any derogs have normally become excluded at 7-10 years, and thus wiping out those accounts will not affect their clients. That ignores the effect on part of their client base, which are consumers, who do suffer loss of those accounts in thier age of accounts scoring.

The consumer can do little to improve age of accounts other than let time pass, but can be victim to loss of accounts in their scoring at any time.

It is far from a perfect system as long as credit reporting is voluntary and the CRAs delete accounts.

Re: Age of Credit

Revelate — Thu, 14 Apr 2016 18:14:32 GMT

@RobertEG wrote:
Age of accounts calculations, both for the oldest account and for the average age of accounts, suffers from two major factors that often leads to problems beyond the control of the individual consumer.

First, any given creditor can decide at any time to delete their account, which removes it entirely from scoring. That applies to both open and closed accounts, but is more common with closed accounts.

Second, the CRAs have an arbitrary policy of deleting old accounts once they reach approx ten years from date closed.
They assume that by that point they are no longer of use to other creditors in that any derogs have normally become excluded at 7-10 years, and thus wiping out those accounts will not affect their clients. That ignores the effect on part of their client base, which are consumers, who do suffer loss of those accounts in thier age of accounts scoring.

The consumer can do little to improve age of accounts other than let time pass, but can be victim to loss of accounts in their scoring at any time.
It is far from a perfect system as long as credit reporting is voluntary and the CRAs delete accounts.

Given one can get to 760 on a clean file after a year, and we've had at least one report of 800 after 2, age is sort of irrelevant: not missing a payment, or outstanding debt, ever, is the key driver to a credit score in the modern credit market... same as it ever was, but losing accounts isn't nearly as problematic as it once was in my estimation.

That said I fully intend to keep 2-3 tradelines forever if I can.

Re: Age of Credit

Anonymous — Thu, 14 Apr 2016 21:17:52 GMT

@sydney449 wrote:
Can Age of Credit be improved somehow?

Hi Sydney. In the case of our original poster (OP), he could pull his reports and confirm that the particular tradeline he's thinking of is indeed on each of the three reports. (Likely he just didn't understand the difference between average age of accounts and age of oldest account, which Robert explained to him.) If there is a particular old account that he's thinking of, and it is not on a particular report, he could always reach out to the creditor and politely discuss it with them. Especially if the account is still open, and he emphasizes how much he wants to still use it, the creditor might be willing to report it for him if somehow it has fallen through the cracks.

To take your question in general terms, the other common strategy for raising the age of your oldest account fast and and dramatically is to become an authorized user on a loved one's very old account (e.g. father's very old credit card). I share the view of some people that this is really a strategy that only makes sense for a person who's just starting out or is rebulding. You become an AU, gain the benefit of 20 years of credit history, get a score boost, and then use that boost to begin applying for a few cards of your own. After a couple years you ask your wife/dad/etc. to drop you as an AU, since you can now stand on your own.

Should you choose to investigate the AU strategy, there are lot of places in this forum that discuss it. It may be the case that some credit card companies will now treat an AU as if it was a new account for you, rather than what you want, which is an account that appears as though it were opened 20 some years ago (say). So as with anything, research everything carefully first to make sure you are getting what you want.

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 11:34:34 GMT

I always was under the impression that average age of accounts had to do with CURRENT accounts, not all accounts. If it had to do with ALL accounts, why do people post on here to never close your oldest CC or your AAoA will drop? If it still counted in your AAoA, closing it wouldn't matter then right? I know CK uses vantage models, but when my oldest CC of 15 years got closed on me my AAoA dropped from 6-7 years to 2.6 years and my score dropped a good chunk that month.

Re: Age of Credit

takeshi74 — Fri, 15 Apr 2016 12:52:35 GMT

@Anonymous wrote:
So I have had accounts report to the CRB since 2008-2009, but when I pull my report its saying thr avg age is like 1yr 7 mon.

Is there anyway to get that fixed?

Average Age is exactly what it says -- an average of the ages of your accounts, i.e. the sum of the ages of your accounts divided by the number of accounts. Even with accounts that reported back in 2008-2009 it's certainly possible to have an average of 1 year 7 months. Have you calculated your Average Age of Accounts? What did you come up with?

@sydney449 wrote:
Can Age of Credit be improved somehow?

Only with the passage of time. AmEx used to backdate but they ended that just over a year ago. You can quickly reduce AAoA by opening a new account but there's no quick way to increase it. The thing is that AAoA isn't just age but number of accounts as well. The trick is to strike a balance between thickening your credit profile with more accounts versus reducing your AAoA by opening new accounts. As one's profile thickens AAoA sees less of a hit from opening new accounts.

@Anonymous wrote:
To take your question in general terms, the other common strategy for raising the age of your oldest account fast and and dramatically is to become an authorized user on a loved one's very old account (e.g. father's very old credit card).

I overlooked this. However, it should be pointed out that accounts where one is an AU may not be considered by a scoring model and/or creditor, sometimes depending on the specifics. FICO, for example allegedly has algorithms to prevent piggybacking like this but I've never seen details on how they determine what to exclude and what to include. A given creditor may choose to disregard accounts where one is an AU (which is indicated on reports) when considering one's credit profile.

@Anonymous wrote:
I always was under the impression that average age of accounts had to do with CURRENT accounts, not all accounts.

CK only considers open accounts which is actually AAoOA, not AAoA. There may be other models that only consider open accounts but that's one example that I know of. FICO, on the other hand, considers open and closed accounts on a report when determining AAoA. There are some creditors that use the VantageScores provided by CK but most creditors use one of the FICO models.

@Anonymous wrote:
If it had to do with ALL accounts, why do people post on here to never close your oldest CC or your AAoA will drop?

People tend to rely on oversimplifcations. Typically closed accounts in good standing no longer appear on reports after 10 years. At that point the closed account no longer factors into AAoA. In theory, AAoA would be greater with the old account. However, in reality one doesn't need to keep every old account for a high score. During those 10 years other accounts also age. All that said, some people may choose to keep their oldest accounts no matter what just as some may choose to go to other extremes to try and eke out every possible point (e.g. carefully controlling reported revolving utilization, number of revolving accounts reporting balances, trying to avoid HP's at all possible cost, etc).

This is only anecdotal but I've closed my oldest accounts a number a times in the past and have eventually lost them over time. However, my latest TU FICO 8 provided by Discover is 825.

As stated above, keep in mind the typical relative weights of the standard factors. Certainly keep the impact to AAoA and Length of Credit History in mind but don't blow it out of proportion.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

@Anonymous wrote:
I know CK uses vantage models, but when my oldest CC of 15 years got closed on me my AAoA dropped from 6-7 years to 2.6 years and my score dropped a good chunk that month.

Again, CK and VantageScore only consider open accounts. The drop in your VS 3.0's only matters to creditors that uses those scores. If your creditors use a FICO model then your FICO's won't see such a drop from impact to age from account closure. Even with CK and VS it's not just age that is impacted but revolving utilization as well (also impacted with FICO models).

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 12:59:59 GMT

Thanks for that information, it was very insightful. I wasn't aware that FICO models included all accounts on the credit report, even closed ones while I was aware that the Vantage 3.0 model only counted open accounts.

Re: Age of Credit

iv — Fri, 15 Apr 2016 15:11:18 GMT

@takeshi74 wrote:
Again, CK and VantageScore only consider open accounts. The drop in your VS 3.0's only matters to creditors that uses those scores. If your creditors use a FICO model then your FICO's won't see such a drop from impact to age from account closure. Even with CK and VS it's not just age that is impacted but revolving utilization as well (also impacted with FICO models).

Not true.

While CK only includes open accounts in their "value-add" charts and calculations, the actual VS3 they provide certainly does include both open and closed accounts.

See http://your.vantagescore.com/resource/81

Re: Age of Credit

sydney449 — Fri, 15 Apr 2016 19:49:28 GMT

Thank you.

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 21:07:52 GMT

Note to BrutalBodyShots, Sydney, etc. --

As Takeshi pointed out, both old and closed accounts count equally factor in your scores. But more than that, in case this isn't clear, your closed accounts continue to age even after being closed. Thus you can open a credit card, close it a year later, and then eight years after that it will be contributing to your age factors no differently than it would if it had remained open for the full nine years. (Except that it will probably drop off your reports ten years after the close date.)

BBS asked "why do people post on here to never close your oldest CC or your AAoA will drop?" (I.e. drop immediately)

Well, if they say that there's a seed of truth in it, though the way they are saying it is mistaken.

First off, and most importantly, its not their AAoA that they are trying to protect (Average Age of Accounts) but a different scoring factor altogether: Age of Oldest Account (AOA). AAoA and AOA are both important factors in the Age category. If you have an old credit card that charges no annual fee, it's worth keeping that going so that it will keep your AOA growing.

Second, your AOA will not drop immediately -- closing the card will, however, cause that card to drop off your report several years from now, which will THEN cause your AOA to change.

EXAMPLE: Bob has three credit cards. Two he just opened, and the other he opened 20 years ago. If he closes his oldest account, his AOA will continue to grow. But 9-10 years from now (or even sooner) that closed card will drop off his reports. Just before it drops off, his AOA will be 30. And after it drops off, his AOA will be 10. Not the end of the world, but he lost a nice AOA when he totally didn't have to.

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 21:55:50 GMT

Very useful info. So the fact that my credit union closed my CC last year that I opened 15 years ago in fact will likely still positively add value to my AAoA for another 9 years give or take. Interesting.

Here's an odd question. That same credit card I just reference above was opened on 3/19/01. Over the years I was issued a new card 4 times; on my report it shows "credit card lost or stolen" 4 times. On my report though, all 5 entries (accounts) show a opened date of 3/19/01. You would think they would show the opened date as the date the new card was issued. Does this mean then that I actually have 5 accounts with a 15 year old age being factored into my AAoA? Is that usually how "lost or stolen" accounts are represented on a credit report, or did a slightly "luck out" in that department?

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 22:58:18 GMT

Not only will that closed account continue to improve your AAoA as long as it remains on your account, if it happens to be the oldest account on your report it will also continue to improve your AOA.

Regarding the card that was lost 4-5 times:

All five entries should indeed have the same date opened, because they are all the same account and that was the date it was opened.

I'd be surprised if FICO is counting that as five different accounts, each 15 years old. It should be possible (I would think) for FICO to see that this is the same account due to fields in the CRA. But of course I'd be interested to hear that I am mistaken.

I am pretty sure that the kind of thing you are describing is possible, however, because I think it happened to me. My student loan was sold by one servicer to another. When they did that, the new servicer indicated that my loan had a Date Opened of a month ago. I objected, and a long debate with the CRAs and the two servicers ensued with multiple failed attempts at correction. After five months of wrangling my reports finally ended up with three different accounts being listed all with different account numbers and different lenders, but with the same very old Date Opened (one loan still open and the other two loans with differing Date Closed). My guess is that FICO views them as three different student loans. Although it is not accurate that I have three loans, the final state of my reports benefitted me and I felt like I kinda earned it with all the work they put me through to fix their mistake.

Losing a card is very common though, so I imagine it must be easy for FICO to detect when the multiple entries all refer to the same card. Again, somebody more experienced may know the answer for sure.

Re: Age of Credit

Anonymous — Fri, 15 Apr 2016 23:27:17 GMT

I see what you're saying. I agree that FICO should be able to pick up on those things.

I had something similar to your loan situation happen with my original mortgage. It was bought out twice by different lenders, once about 2 years after I got the house and another about 3 years after that and it's been with the 3rd company for 6 years now. On my credit report it shows 3 different mortgages with 3 different count origination dates when I actually only applied for credit once. I guess there are just some things that we have no control over.

I do find it interesting that it counts all of the reissued credit cards as additional accounts... that is, the "total number of accounts" is higher by the number of reissued cards which I believe could indirectly improve ones score a tad as well.

Re: Age of Credit

iv — Sat, 16 Apr 2016 00:06:09 GMT

@Anonymous wrote:
Very useful info. So the fact that my credit union closed my CC last year that I opened 15 years ago in fact will likely still positively add value to my AAoA for another 9 years give or take. Interesting.

Yup.

@Anonymous wrote:

Here's an odd question. That same credit card I just reference above was opened on 3/19/01. Over the years I was issued a new card 4 times; on my report it shows "credit card lost or stolen" 4 times. On my report though, all 5 entries (accounts) show a opened date of 3/19/01. You would think they would show the opened date as the date the new card was issued. Does this mean then that I actually have 5 accounts with a 15 year old age being factored into my AAoA? Is that usually how "lost or stolen" accounts are represented on a credit report, or did a slightly "luck out" in that department?

In my experience (multiple compromised cards over the years), that's not all that normal - usually the previous tradeline is removed, and the new one is added (but with the open date and sometimes the payment history of the old one).

But it's all up to what/how the issuer reports... the CRAs and FICO are not doing any sort of de-dup there.

And yeah, assuming there are no negative indications on the duplicate tradelines, it does currently count as a positive factor on your report.

Re: Age of Credit

Anonymous — Sat, 16 Apr 2016 00:19:02 GMT

Sweet, thanks for that insight. The card was through a local credit union, so perhaps since they're relatively small they aren't up to speed on doing everything quite the right way. I'll certainly take a "bank error in my favor" though if it means a few extra points on my credit report due to a greater AAoA.

Re: Age of Credit

Anonymous — Sat, 16 Apr 2016 01:52:54 GMT

I like the Monopoly reference.

It's a really sweet error in your favor. Four extra 15 year old tradelines? That's really nice.

Re: Age of Credit

KSK1912 — Sat, 16 Apr 2016 02:17:48 GMT

@Anonymous wrote:
Sweet, thanks for that insight. The card was through a local credit union, so perhaps since they're relatively small they aren't up to speed on doing everything quite the right way. I'll certainly take a "bank error in my favor" though if it means a few extra points on my credit report due to a greater AAoA.

That may be the reason. Normally with the credit cards, because your credit card number is your account number as well, everything, payment history, open date, all will stay the same in your report, and only the account number will change, which does NOT make it a NEW account. Just like if you have AT&T cell phone service for the past 10 with no interruption, and for whatever reason you need to change your phone number, or your area code because you moved, this does not delete your history with att and open a new account, they simply make the changes in the system and give you a new number. It is the same with the cc's as well. I just did it recently on my cap one cc, and all that happened is when they reported the payment and the balance last month, i got a notification from TU that the account number had changed. That's it. Everything else is exactly the same.

Re: Age of Credit

Anonymous — Sat, 16 Apr 2016 14:15:36 GMT

Absolutely. Fortunately they will fall off at the rate the new cards were issued, which is the date that the previous was closed so at least they will be periodically lost. It would sting to lose five 25 year old accounts 10 years from now.