@smallfry wrote:
Helps with average age? I dunno. In ten years after everything closed drops off my reports my average age will be 10 years on all the new accounts I have opened this year whether I open more cards now or not. I don't see your point but maybe I am missing something.
Example. (not to be taken literally)
Person A has 20 credit cards that are all 10 years old. All open.
20x10=200 dived by 20 accounts = avg 10.0 years.
Person A adds 3 new accounts.
200 dived by 23 accounts = avg 8.7 years.
Person B has 4 credit cards that are all 10 years old. All open.
4x10=40 dived by 4 accounts = avg 10.0 years.
Person B adds 3 new accounts.
40 dived by 7 accounts = avg 5.7 years.
Person A with 20 credit cards has an average age 3 years older.
Now look at this.
Person A adds 15 new accounts
200 dived by 35 accounts = avg 5.7 years.
Person A with more credit cards can add (5 times) more new accounts before matching average age compared to
Person B who only opened 3 new accounts.
You need to add all the cards when your average age is very young and let them age 10 years. Mostly for people rebuilding or new to credit since they can't really lower their avg age much lower than it already is. They only can gain.
For people with an established avg age, it's a little late to add all these cards because it will just lower their avg.
To answer your question... Yes after 10 years closed accounts will fall off and avg will return to normal. But for the first few years after the new accounts are open the age will drop. And to be honest it probably doesn't hurt that much even if your avg age drops a few years. A few points. Maybe I go over board a little sometimes?
But it really depends on how many accounts a person needs to open. If they only open 1-3 a year, it's not a big deal. But if they open many for business then they would need more cards to keep up their average age. It's about keeping a balance.
Message Edited by ilovepizza on
10-13-2007 09:18 AM
