I'm waiting to get my FICO above 700, and may either trade in or refinance my car. My current interest rate is around 14% (got the loan with little credit and zero down), and I know I can get a better one...especially with a good FICO score.
But does this reset the AoYA to zero? If so, this would put me back in the situation I just got myself in with an App Spree, which I'm working hard to avoid in the future.
A new loan would be your newest account and will factor into AAoA but it won't set your AAoA to 0. It may set time since new account opened to 0.
AAoA if you have 3 accounts that are 2 years old and 1 brand new account you have 4 accounts /6 (total years open)
You AAoA started at 2 years and would end at 1.5 years if you opened a new auto account.
Yeah it does reset AOYA to zero but if you can save non-trivial interest vs. a 14% loan, do it.
Q: What is the purpose of a high credit score?
A: To obtain credit with low interest rates.
Q: Why do you want a new loan?
A: to have a lower interest rate.
Q: Why do you not want a new loan?
A: it will lower your credit score.
But if the purpose of the credit score is to get you a low interest loan, and you can get a low interest loan, why worry about your credit score going down? Do you have another major purchase around the corner?
I once saw a documentary about a man who really liked his shoes. He would take them off to walk down dirty sidewalks to avoid getting them dirty. Would literally walk barefoot to protect his shoes. Why? I wondered. Isn't the purpose of shoes to protect feet? What is the point of owning shoes if you aren't going to wear them.
The same is true for credit scores. Trying to raise your score is great, but if you aren't using credit to save money what is the point?