How to Calculate the AAoA

[NonSufficientFunds]

In the past two years, I have been rebuilding my credit, after many years of living on cash and debit, and I have acquired six credit cards, so my credit report was showing an AAoA of 1.3 years.

I recently received the AmEx Gold card, which has been backdated to 1983. 

Even though the credit report now shows that my oldest account is 30 years, the AAoA appears as only 5.6 years.

My question is: If I apply (and am approved) for the Costco TrueEarnings AmEx card - which I understand can also be backdated to 1983 - will this effectively double my AAoA to 11 years?

Does anyone know of a formula for easily calculating AAoA ? - It would be very helpful when considering the impact of opening a new TL.

[HiLine]

Let's see

Total ages before 1st Amex backdate: 1.3*6=7.8

Total ages after 1st Amex backdate: 5.6*7=39.2, which is approximately 7.8+30 (rounding error)

Total ages after 2nd Amex backdate: 39.2+30=69.2

AAofA after 2nd Amex backdate: 69.2/8=8.7, plus or minus 0.5 or so

[NonSufficientFunds]

Thanks for the reply, HiLine

I thought that collecting a bunch of backdated AmEx cards would have a much more dramatic effect on my AAoA, but now that I see how the math works, it's probably not worth the trouble for the actual impact the AAoA has on the credit score.

I am glad that you have explained the formula - THANKS

[Anonymous]

Yes, so if you have n cards, with AAoA x, and you add one more, backdated by b years,

the new age is just (n*x + b)/(n+1)

and for "big enough" n, this is approx (actually a little less than)

x + b/(n+1), i.e the age changes by the backdate divided by the new number of cards.

And as you see in your case, even with a large backdate of 30 years, the impact isn't that great with 8 cards, and many people are getting backdates much less than 30 years.

So, worth something (especially with small number of cards) but not as much as many think.

[oscar_actuary]

To think back 25 years ago when I had an MBNA CC and a NY Bank line of credit.  Not to mention a couple other CC along the way.  Then I met Dave Ramsey and closed all of them.  My oldest now is 12 yr