A string of payday loans aging off

[creditn00bAt40]

After reading through a number of the (incredible) educational articles available here, I thought I had a clearer understanding of fico scoring but the info is dense (and I can be dense in the bad way) so I get confused.

This year I have a string of payday loans aging off my Equifax and trans union reports. I was a serial renewer at the time, so each account was only open for 2-3 months before being closed. I am happy for them to go because I hate the payday loan / consumer finance association. But my credit file is young; aside from student loans and the payday loans, my oldest accounts are several years old. My question is, is it better for my credit to lose the CFAs? Is the short lived nature of the accounts causing more harm than the fact that they're 9+ years old? Or do neither of those things play into fico scoring - is the bottom line your average age of accounts/ age of oldest account?

[FlaDude]

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@creditn00bAt40 wrote:

This year I have a string of payday loans aging off my Equifax and trans union reports. I was a serial renewer at the time, so each account was only open for 2-3 months before being closed. I am happy for them to go because I hate the payday loan / consumer finance association. But my credit file is young; aside from student loans and the payday loans, my oldest accounts are several years old. My question is, is it better for my credit to lose the CFAs? Is the short lived nature of the accounts causing more harm than the fact that they're 9+ years old? Or do neither of those things play into fico scoring - is the bottom line your average age of accounts/ age of oldest account?

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There is a small score penalty for having CFA accounts, I'm not sure if having more than one is any different than just one, so you should gain a few points when the last one drops. I don't think FICO cares about the accounts being short lived, other than the fact that several new accounts affects your average age more than a single new account would. Since they are almost nine years old, your average age sounds like it will be lower when they drop off, causing a (probably small) score drop.

[Thomas_Thumb]

Your credit history is based on age of oldest account on file. That is a criteria for scorecard assignment and can influence score independent of AAoA.  Both age of youngest account (AoYA) and AAoA also influence score and AoYA is another criteria for scorecard assignment.

Presence of Payday CFAs can hurt score. It is not so much their short lived nature as their classification as CFAs. Point penalty has not been quantified rigorously. Possibly 10-15 points in aggregate, imo. You should celebrate them aging off.

Edit add: Given the closed Payday loans are over 7 years age they may no longer be negatively impacting score. If so, you could lose a trivial 5 points due to a drop in AAoA.

As long as one of your student loans or another account has decent age, say 5 years or more, you're ok for AoOA. Sure, over 10 years would be better.

It is preferrable to have/maintain an AAoA of atleast 3 years. Not sure where you are currently or how much it will drop. 

[pizzadude]

Unless the payday loan accounts have any lates or derogatory notations, I wouldn't expect a huge score lift when those loans age off - as you called out they may have been helping your AAoA more than the CFA designation was hurting. 

[SouthJamaica]

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@creditn00bAt40 wrote:

After reading through a number of the (incredible) educational articles available here, I thought I had a clearer understanding of fico scoring but the info is dense (and I can be dense in the bad way) so I get confused.

This year I have a string of payday loans aging off my Equifax and trans union reports. I was a serial renewer at the time, so each account was only open for 2-3 months before being closed. I am happy for them to go because I hate the payday loan / consumer finance association. But my credit file is young; aside from student loans and the payday loans, my oldest accounts are several years old. My question is, is it better for my credit to lose the CFAs? Is the short lived nature of the accounts causing more harm than the fact that they're 9+ years old? Or do neither of those things play into fico scoring - is the bottom line your average age of accounts/ age of oldest account?

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1. The short lived nature of the accounts is irrelevant.

2. The age of the accounts is a factor, and if they do age off of your reports you might lose some points.  They do factor into average age. And if one of them was your oldest account, your age of oldest account is going down too.

3. No one seems to know how much the CFA stigma actually affects scores, but the consensus seems to be : not much.

4. There is no guarantee that an old account will "age off".

Bottom line, I wouldn't worry about it. I would just rejoice