@Thomas_Thumb wrote:
@SouthJamaica wrote:Does the Age of Youngest Account factor take new installment loans into account?
I.e., if one has not added any revolving accounts in more than a year, but does add an installment loan, would that change one's scorecard?
My present dilemma: I am in the higher scorecard, not having added any new accounts for more than 12 months. I have an installment loan which is running out soon. I am thinking of replacing it with a paid-down SSL (share secured loan), but wonder if the addition of the SSL will cause negative score effects that will offset the positive.
Below is a slide from a now old Fico presentation. One of the scorecard factors for clean files is: Recency of new accounts. The statement doesnot differentiate between installment and revolving credit accounts. Why not? Either the presentation is generalized for simplicity or Fico 8 does not differentiate between account types when assigning a new accounts scorecard.
My take is Fico does not differentiate between the account types. The models consider both account types when determining age of credit history. Fico also looks at closed installment loans but not closed revolvers in credit mix analysis. I believe 12 months for youngest account is important for scorecard assignment. Virtually everyone mentions experiencing a score penalty when AoYRA drops from greater than 12 months to new.
That score drop is often not observed if AoYRA is over 12 months and a new installment loan is opened. There are 2 possibilities for this: 1) an open installment loan under 12 months already existed, 2) Newness of installment loans are not penalized to the same degree that revolving accounts are.
SJ - Overall, I think maintaining continuity of an open loan may be more beneficial to you than a likely change to a different scorecard scorewise. You may be in a good position to do some testing.
Thank you very much @Thomas_Thumb
Yeah. In the 'science' world I'm in a perfect position to test this thing, and answer the question, since I am over 12 months in terms of any kind of new account, have definitely received the score boost from joining that scorecard, and am now contemplating opening a new installment account.
But I'm really not in a perfect position in the real world, because I'm fragile at the moment and my scores are hanging on to the low 700's by a sinew. I wish someone else could be the test candidate.
But I will report back here.
Since the SSL will just be replacing another mostly-paid-down loan, it should produce no score increase.
If I add the SSL and things stay on an even keel, we will know that AoYA just applies to revolvers. And if we like, we could refer to it as AoYRA 
If I add the SSL and something bad happens, we will know that AoYA applies to both revolvers and installment loans. If something bad does happen I would expect it to be in this neighborhood in FICO 8:
EQ -9
TU -11
EX -19
Wish me luck.
@Thomas_Thumb wrote:
I believe you currently have an open loan under 9% B/L.
1) Record score and reason statements
Add the new loan before the old one closes.
2) Check score and reason statements before paying down the new loan. (score drop due to high B/L)
Paydown the new loan to under 9% before the old closes
3) Check score and reason statements (score increases back to #1 level?)
Payoff and close the older loan
4) Check score and reason statements (score may drop slightly if Fico looks at open loan AAoA and/or AoOA)
The testing requirements you've laid out would be hard for me to implement realistically.
For one, it takes a while for things to report. E.g, I wouldn't want to wait a month to pay down the new loan.
For another, it would be a huge undertaking to gather all the reason codes for all 3 bureaus. I'm going to confine my report to EX, where I can update both scores and reported data daily.
But I'll try to provide a meaningful report.
@SouthJamaica wrote:
@Thomas_Thumb wrote:
@SouthJamaica wrote:Does the Age of Youngest Account factor take new installment loans into account?
I.e., if one has not added any revolving accounts in more than a year, but does add an installment loan, would that change one's scorecard?
My present dilemma: I am in the higher scorecard, not having added any new accounts for more than 12 months. I have an installment loan which is running out soon. I am thinking of replacing it with a paid-down SSL (share secured loan), but wonder if the addition of the SSL will cause negative score effects that will offset the positive.
Below is a slide from a now old Fico presentation. One of the scorecard factors for clean files is: Recency of new accounts. The statement doesnot differentiate between installment and revolving credit accounts. Why not? Either the presentation is generalized for simplicity or Fico 8 does not differentiate between account types when assigning a new accounts scorecard.
My take is Fico does not differentiate between the account types. The models consider both account types when determining age of credit history. Fico also looks at closed installment loans but not closed revolvers in credit mix analysis. I believe 12 months for youngest account is important for scorecard assignment. Virtually everyone mentions experiencing a score penalty when AoYRA drops from greater than 12 months to new.
That score drop is often not observed if AoYRA is over 12 months and a new installment loan is opened. There are 2 possibilities for this: 1) an open installment loan under 12 months already existed, 2) Newness of installment loans are not penalized to the same degree that revolving accounts are.
SJ - Overall, I think maintaining continuity of an open loan may be more beneficial to you than a likely change to a different scorecard scorewise. You may be in a good position to do some testing.
Thank you very much @Thomas_Thumb
Yeah. In the 'science' world I'm in a perfect position to test this thing, and answer the question, since I am over 12 months in terms of any kind of new account, have definitely received the score boost from joining that scorecard, and am now contemplating opening a new installment account.
But I'm really not in a perfect position in the real world, because I'm fragile at the moment and my scores are hanging on to the low 700's by a sinew. I wish someone else could be the test candidate.
But I will report back here.
Since the SSL will just be replacing another mostly-paid-down loan, it should produce no score increase.
If I add the SSL and things stay on an even keel, we will know that AoYA just applies to revolvers. And if we like, we could refer to it as AoYRA
If I add the SSL and something bad happens, we will know that AoYA applies to both revolvers and installment loans. If something bad does happen I would expect it to be in this neighborhood in FICO 8:
EQ -9
TU -11
EX -19
Wish me luck.
I'll be rooting for you!
I can't meet the steps @Thomas_Thumb laid out, and my AoYA was not quite a year at the time I added a new loan, but I'll share what DPs I can if it helps you make any kind of determination @SouthJamaica.
Had a new installment loan show up on all reports Jan, 2024
- EX +2
- TU -2
- EQ -6
Only difference in accounts reporting across the three is EX has one more closed, paid loan that the others don't.
Other DPs: 4/12 inquiries, 2 on EX, 2 on TU
Agg. UTI 10.6%
In March my youngest revolving account reached 1 year
- EX +17
- TU +15
- EQ +19
No changes in accounts reporting
Other DPs: 2/12 Inquiries, 1 EX, 1 TU
Agg UTI 10.8%
@JoeRockhead wrote:I can't meet the steps @Thomas_Thumb laid out, and my AoYA was not quite a year at the time I added a new loan, but I'll share what DPs I can if it helps you make any kind of determination @SouthJamaica.
Had a new installment loan show up on all reports Jan, 2024
- EX +2
- TU -2
- EQ -6
Only difference in accounts reporting across the three is EX has one more closed, paid loan that the others don't.
Other DPs: 4/12 inquiries, 2 on EX, 2 on TU
Agg. UTI 10.6%
In March my youngest revolving account reached 1 year
- EX +17
- TU +15
- EQ +19
No changes in accounts reporting
Other DPs: 2/12 Inquiries, 1 EX, 1 TU
Agg UTI 10.8%
Thanks @JoeRockhead but that doesn't provide an answer, because you weren't in the AoYA > 12 months scorecard at the time you got the loan.
The question I'm trying to figure out is whether the new installment loan will knock me out of the AoYA > 12 months score card.
I suppose not, but I found it interesting that my youngest account is currently listed at 7 months, and I still got the bonus points for my youngest revolver turning a year.... If only I waited three months on the loan, dang it
@Thomas_Thumb wrote:
@SouthJamaica wrote:Thanks @JoeRockhead but that doesn't provide an answer, because you weren't in the AoYA > 12 months scorecard at the time you got the loan.
The question I'm trying to figure out is whether the new installment loan will knock me out of the AoYA > 12 months score card.
Being switched to a new accounts scorecard does not necessarily drop score unless it is caused by a new revolver. However, the new accounts scorecard is more sensitive to elevated revolving utilization. So, if AG utilization is elevated (over 9% imo) or a card UT is above 29%, the scorecard change could trigger a score drop. On the other hand, if revolving UT was below these thresholds, then no score drop - except for the new account HP.
Unfortunately, SJ's revolving utilization has not been optimized recently. So, the hyper sensitive new accounts scorecard could negatively impact his score.
Having an open mortgage (perhaps other installment loans as well) mutes impact of elevated utilization and number of cards reporting a balance. So, keeping an open loan even if there is a 12 month penalty makes sense if scores are under 780 and future new credit is a consideration.
Neither applies to me so no new loans in my future.
If I am bounced to the new accounts scorecard my scores will definitely get trounced. Which is why I would like to know if the new SSL is going to cause me to get bounced. If it is, I may just want to hold off and see how much damage is done by the no-open-loan penalty by itself.
@Thomas_Thumb I will be testing to see if AoYA includes instalment accounts or not. I won't be using the term "AoYA", since we don't yet have a definition for that term; we don't know if it includes all accounts or just revolving accounts. I will use the terms "AoYRA" for age of youngest revolving account, and "AoYIA" for age of youngest instalment account. Here's my starting point:
| Date | AoYRA | AoYIA | EX FICO 8 | #1 Neg reason code | #2 Neg reason code | #3 Neg Reason Code |
| Start | 12 mos + | 12 mos + | 715 | High credit usage | High revolving balances | Short account history |
I'm not well versed in spreadsheets, but will try to maintain it as a spreadsheet.
I would be delighted to stop this experiment, if someone could come along and tell me definitively whether or not the addition of a new instalment account will affect AoYA for scoring purposes.
There's no lasting harm in waiting to see. You can open an SSL quickly, and in my case Penfed reported it to all 3 CRAs within about 10 days. That said, there seems to be ample evidence that you can expect to lose 25-35 points when your only and low B/R installment loan closes.
In my case, I case I lost 28 points, but did get a nice attaboy alert for paying off the loan.
There also would appear to be ~20 points to gain when the youngest revolver turns 12 months old, which is not correlated with having an installment loan <12 months. There seems to be disagreement here as to whether this is associated with a score sheet reassignment or not, however.