How does average Age of Accounts Factor?

[Anonymous]

Hey everyone, I'm going to try and ask this without sounding confusing lol.
I am wondering for example you have 2 accounts, the 2 accounts are each 1 year old. You then get a new account that is 1 month old. Every month your accounts get older by one month. So does that mean that every month your average age of accounts goes up one month? Or does it go up three months because there are three accounts? Every month your average age would go up though right?

[RobertEG]

If you dont add or delete any trade lines, then each TL ages one month per every one month that you age.

Add up the total age in months of all accounts since date opened, and then divide by the number of accounts.

Your suppostion will be correct if the denominator (number of accounts) remains the same.

Do not include collections, as they are not accounts of the consumer, they are accounts of debt collectors.

[takeshi74]

AAoA is an average.

2 accounts 1 year old each is:

(12 months + 12 months) / 2 = 12 months or 1 year

2 accounts 1 year old each plus a new account is:

(12 months + 12 months + 1 month) / 3 = 8.33 months

One month later:

(13 months + 13 months + 2 months) / 3 = 9.33 months

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@Anonymous wrote:
So does that mean that every month your average age of accounts goes up one month? Or does it go up three months because there are three accounts?

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Keep in mind that it's total age / number of accounts as it is an average.

3 months added / 3 accounts is +1 to AAoA

As RobertEG points out, that assume that no new accounts are added and that no closed accounts fall off.

Don't overlook resources such as this:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Which has a link to a thread on how AAoA is calculated.