@longtimelurker wrote:
@Anonymous wrote:
Why so many credit cards? AAoA (Average Age of Accounts). It's the law of averages...the more cards you have, the smaller the impact of a new credit card to your AAoA. I have 60 accounts. It's very difficult to lower my AAoA through new card applications. I have to get like 15 credit cards at once to even bring my AAoA down by a month...and the more years that go by the more difficult it is to bring my AAoA through new applications.
While true, I find this amusing . Basically you are saying it's good to have lots of cards because it makes it easy to get more! Which doesn't make sense to those who question why you need more than say 2 cards.
Of course everybody's lifestyle and desires are different and some people can buy a house or car on cash Or maybe they never have emergencies when cash is needed.
But the way I see it, AAoA counts for ~10% of your FICO score. If you have 2 cards at an excellent 5 years each, your AAoA is 5 years. But let's say you add a car loan, all of a sudden your excellent 5 years AAoA becomes an average 3 years.
And let's say you subsequently buy a house; those lost FICO points on AAoA could cost you .5 percent interest. Needless to say; .5% interest on a compounded $400,000 mortgage could end up costing you $40,000 over the life of a 30 year loan.
All because you had no kind of AAoA buffer with only 2 credit cards.
I'm not judgmental, some people work fine with just 2 credit cards. For me, I like a bit of insurance on my precious AAoA for life emergencies and when I want to make a big purchase and can use every FICO point I can get.
