How important is AAOA for newcomers?

[Anonymous]

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@Revelate wrote:

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@Anonymous wrote:

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@Revelate wrote:

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@Anonymous wrote:

AAOA has been extremely weird for me. Didnt start using credit cards until April 2014, and wasnt until a year later when I joined here and started taking my credit more seriously.

I have several student loans up to 13 years old.  The strange thing is after adding over 7 new accounts my AAOA has only dropped from 2years 9 months down to 2 years 2/3 months.

I think my scores would have nose dived if it wasn't for those old accounts. Somehow they are factoring in.  And I have even seen my AAOA and score go up after disputing some loan payment reporting...when sometimes for other people it can hurt your AAOA.

My CK and myfico AAOA have always been the same...maybe because I don't have any closed accounts. But have several closed loans though.

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FICO does Average Age of Accounts (AAOA) and includes closed accounts.

CK does Average Age of Open Accounts (AAOOA?)

CK is not accurate for FICO in this case; honestly CK is best in the market for report access, but some of their stats about a report are laughably bad and this is one such example.

Regarding AAOA, it is pretty minor comparitively; I have a dirty file so this is all going to be magnified for a clean file but to give you an example: When I went from AAOA 2 years to 1 year (during an app spree) I lost 4 points on a FICO 8 model.  When I just recently went from an AAOA of 3 years back down to 2 years after yet another slew of accounts, this wasn't a fully clean datapoint for a number of reasons but it looks as though I've lost around 5-6 points on it.

As Cally correctly states, you'll get credit age and therefore increased AAOA over time.  The vast majority of people within 2-3 years get every single card they need (want vs. need changes over time for the majority of people on this forum, the "Ooooh Shiny!" effect wears off credit approvals typically), and then it's just things like new car or new mortage and occasionally if some godlike rewards card comes out perhaps applying for that, but realistically the vast majority of credit improvement is simply never being late on a payment and never paying less than the minimum.  

We don't really know what the max score with a minimum AAOA is but based on some reports for people in their building stage it's right around 760 for FICO 8 which doesn't suck.  It may require around 5 or more years to hit close to 850 though, but since anything north of 760 is still gold-plated, it's not really an important goal.

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Interesting.  I just wish certain things weren't so mysterious.  Scores don't always have the most impact...obvious from my denial from BOA. (later approved from joint app...dumb idea, should have just waited). I dont get why I was able to add ten inquiries since april and then all the sudden one month have a 50 point increase on each bureau. What could have triggered that? I dont think it was the utilization going down a few points. This whole time I thought having a 120 day late loan error was going to hinder my scores until it fell off.  Guess I will never know.

I don't get credit 100%. I probably never will. But it is kinda refreshing to hear that my scores are pretty darn close to "gold-plated" lol. I dunno. I don't really feel like thats what my scores are. I still feel like they are in the 600's from my starting limits, CLI denials, etc. But its from being impatient. Life is good. As long as I can get a bonus a few times a year, I will be content.

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How old is the 120 day late? 

Hard to say but between age and pattern of lates (in FICO 8) entirely possible it got discounted; certainly would account for that potential jump where not much else would.  Even the surprise installment utilization change is usually on the order of 25 points, but without really looking at the reports it's hard to say.

It's generally not worth worrying over once you get to a particular level; now that my mortgage is sorted and I'm in an extended flat period, as long as my score gets to 760 in 2 years when the last of my issues is gone, I'm not going to worry about it other than random datapoint testing.

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120 day late is from december 2012 i believe. Its an error. Have 8 loans and all in great standing, and its just this one tiny 1500 loan that has this. And recently I was told all my goodwill letters the last year never made it as they have to be snail mailed. So I did mail them one in august but its still showing up as late.  I just wish I knew exactly what did it. Must be me hitting the threshold for when inquiries stop hurting as much, and adding enough trade lines to surpass 50k hit some level or something. Its like the tootsie pop commercial...the world may never know...lol

[Anonymous]

Once you have more than a handful of accounts AAoA becomes pretty stable no matter what you do.

When you open your Nth account, AAoA drops by 1/Nth. So the first few really hurt--your 2nd account cuts your AAoA by 1/2, your 3rd by 1/3rd. But by the time you have ten or more accounts open, it isn't hurting you much--the 20th account knocks 5% off your AAoA. Big deal.

This is why advice to people just starting out is to get those first few accounts opened quickly, to get the big hits to AAoA out of the way early in their credit history, when 1/2 your AAoA is still just a couple months, so that from an AAoA perspective new acocunts later aren't a big deal (just inquiries and new account penalty--which wears off, unlike AAoA changes).

Consider two people:

John opens 1st account on Jan 1st, and 2nd account on Dec 31st. His AAoA is 6 months since the 2nd one cut it in half. Sally opens her 1st account on Jan 1st, and also opens her 2nd account same day. A year later her AAoA is 1 year, even though she has exactly the same number of accounts as John. Which leads to this principal: If you know you are going to app it eventually, and you believe you will succeed in apping it, app it sooner than later.