AAoA Calculation?

[Dee2]

Hi All,

I'm fairly new to the board and just became familiar with the term AAoA.  I've done a search and have gotten a ton of hits in trying to find the answer to my question. 

I'm trying to determine what my possible AAoA will end up being after having taking out a new Credit Card.

In March 2009, I pulled my FICO score from Equifax website.  It showed my Fico Score to be 708 with an AAoA of 6 years and 9 months.  (this was not the FAKO score)

Today I applied for and was approved for a Navy Federal Credit Union Plantinum Visa Card with a credit limit of $15,000.  Honestly, I had no idea I would get approved for so much nor do I really need that much of a limit. 

Just a brief history of my credit profile.

Capitol One Master Card  = $1,250

Sears                             = $2,550

Childrens Place               = $700

Bankruptcy discharge       04/2002

Mortgage (Wells Fargo)    01/2006

Student Loans  (approximately $38,000)

I have no late payments or derogatories (sp) since the bankruptcy in 2002.

Anyways....I'm trying to determine how this new credit card will affect my AAoA.  I was so closed to hitting the AAoA of 7 years (not sure if that means anything), but upon reading several posts it looks like getting a new credit will affect my AAoA in some way.

I'm trying to avoid pulling my credit report again (those $14.95 add up) although know it doesn't ding me to pull my own.

Any idea what my AAoA will be now?

Thanks

~Dee

[haulingthescoreup]

Your AAoA is the sum of the ages of every account on your report, whether open or closed, divided by the number of accounts. Your AAoA of 6y 9m could result from having only one account on your reports, opened 6y 9m ago, or it could result from a number of accounts ranging from having been opened 20 years ago to last month.

So to figure out the impact on your new card (congrats! that's a nice one), you'll need to figure the age of each account, open or closed, on each report. If all three reports are identical, you're in luck; otherwise, you'll need to run this for each report.

It's easiest to figure this in months. So an account opened in January 1995 and closed in September 2003 would be 14y 4m or 172 months old. (Remember, it doesn't matter if it's closed. You're just looking at the opening date.) Do this for every account on your report, and add up all the ages in months. (Write down the sum, btw.) Divide by the number of accounts, divide by 12 to put back in years, and instead of a decimal, express the remainder in months, as in dear old 4th grade division. You should wind up with 6y 9m, maybe 6y 11m by now. Now take that same total of ages and divide by the number of accounts +1, to represent the new account, and divide. That will be your new AAoA.

Depending on the number of accounts on your reports, and whether more of them are older vs newer, a new account can have very different effects on your AAoA.

Hope that wasn't overkill!

[Dee2]

hauling,

thanks for your very thorough reply.  Now, I think I got a brain freeze

Forgive me, but I am a little numbers challenged.  Is there any way I can get around all the math?  For instance, can I just add/subtract/multiply/divide the 6 years 11 months by this 1 additional account to come out with an approximate number?

Thanks again.

[cobaltnv]

I am not hauling, but can answer your question. If you take the 6 years 11 months (83 months) and multiply by the total number of accounts (open and closed as hauling stated) you will get your total number of months. Take this number and divide by the total number of accounts +1 (or however many new accounts you wish to add).

Cheers 

[haulingthescoreup]

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cobaltnv wrote:

I am not hauling, but can answer your question. If you take the 6 years 11 months (83 months) and multiply by the total number of accounts (open and closed as hauling stated) you will get your total number of months. Take this number and divide by the total number of accounts +1 (or however many new accounts you wish to add).

Cheers 

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Oh my goodness, thank you so much for posting this! At one point I knew this, but I spaced.

FWIW, this works if you know the exact AAoA, as with OP's Equifax full reports. But if all you have is the even-number-of-years AAoA that you get with FICO reports, you'll have to do it the hard way.

Thanks again, cobalt; I will try to remember the easy version the next time I'm asked.

[cobaltnv]

Glad I could help. You (and others) provide so much good information on here. I am happy to be able to contribute in some small way.

As an added note even if you only have the rounded down number of years from MyFico you can still use this method. In fact the actual AAoA will always be higher than the calculation. So you will have a lower limit on your AAoA which is not so bad since Fico rounds down anyway.

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@haulingthescoreup wrote:

Oh my goodness, thank you so much for posting this! At one point I knew this, but I spaced.

FWIW, this works if you know the exact AAoA, as with OP's Equifax full reports. But if all you have is the even-number-of-years AAoA that you get with FICO reports, you'll have to do it the hard way.

Thanks again, cobalt; I will try to remember the easy version the next time I'm asked.

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[FocusOnFICO]

Cobaltnv----thank you for the breakout.  Just to be sure, the open accounts are calculated full from date opened to current date.  The closed are calculated date opened to current date or date closed?

Thanks.

[cobaltnv]

All open and closed account are counted from date opened until current date. That is as far as AAoA goes it does not matter if an account is opened or closed. 

 There are two types of accounts (I think) that are not counted in AAoA calculation. I believe it is CA and ??. 

[smallfry]

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@FocusOnFICO wrote:

Cobaltnv----thank you for the breakout.  Just to be sure, the open accounts are calculated full from date opened to current date.  The closed are calculated date opened to current date or date closed?

Thanks.

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Counted current until they drop off your reports so closed and open count the same towards AAofA.Closed accounts eventually drop off so this is why FICO says don't close those old accounts.

[smallfry]

Fast fingers cobalt.