AAoA With Opened/Closed Accounts

[Anonymous]

Was driving into work and thinking about a people who open an account for the sign up bonus and then closing at the on year mark. Does this affect your AAoA once you closed the account? Let's say you have 4 cards and AAoA is 2.5 years. When getting a new card, I assumed the AAoA will be 2.X or around 2 with the total years of all cards being 10.

Once close, do you go back to the AAoA of 2.5 or whatever you have before or will AAoA consider the closed accounts? Thanks for the answer in advance.

[longtimelurker]

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@Anonymous wrote:

Was driving into work and thinking about a people who open an account for the sign up bonus and then closing at the on year mark. Does this affect your AAoA once you closed the account? Let's say you have 4 cards and AAoA is 2.5 years. When getting a new card, I assumed the AAoA will be 2.X or around 2 with the total years of all cards being 10.

Once close, do you go back to the AAoA of 2.5 or whatever you have before or will AAoA consider the closed accounts? Thanks for the answer in advance.

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FICO scores continue to count closed accounts for AAoA, until they drop off (about 10 years after closure).   Some non-FICOs, such as Credit Karma, may use AAoOA (average age of open accounts) which is one reason why their scores can be very different from FICOs.

If you are bonus churning (i.e. doing this frequently) your AAoA drops just becuase you are getting lots of new cards.

[Thomas_Thumb]

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@Anonymous wrote:

Was driving into work and thinking about a people who open an account for the sign up bonus and then closing at the on year mark. Does this affect your AAoA once you closed the account? Let's say you have 4 cards and AAoA is 2.5 years. When getting a new card, I assumed the AAoA will be 2.X or around 2 with the total years of all cards being 10.

Once close, do you go back to the AAoA of 2.5 or whatever you have before or will AAoA consider the closed accounts? Thanks for the answer in advance.

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1) Fico calculates an average age of accounts based on open and closed together. Whenever you add a new account it will drop your AAoA. If/when you later close that account it still factors in to your AAoA for as long as it is in your credit file (typically until 10 years after closure).

The account continues to age even when it is closed. Really, unless the account has an annual fee, no harm in keeping it open even if not used. That way you get the benefit of the associated credit limit. Sometime down the road the card may be closed by the issuer due to inactivity. That's fine, it's not an issue - unless you wanted to keep the card open. If you want it to remain open, use it at least once every 4 to 5 months.

2) VantageScore 3.0 (which CK reports) calculates an average age of accounts based on open accounts only. In this case a new open account will drop average age as with Fico models. However, if you later close the account, the accounts associated age no longer factor into average age. Depending on age of the account being closed, average age of open accounts could go up or down. If the account is new as mentioned by the OP,  average would typically increase.