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Inside Baseball, why does gardening work?

Regular Contributor

Inside Baseball, why does gardening work?

I think I understand that there's a couple of FICO 08 score bumps that have to do with having at least 3 cards, managing them for AZEO, and credit mix. This post is not about those.


I'm trying to figure out what is happening during gardening that helps grow scores. (Assuming no new lates or other derogs appear on your report.)


I know that taking on new TLs reduces your AAoA. Allowing those to age would recover points lost from the decrease in AAoA. Except when your AAoA crosses certain thresholds(again, higher than what it was before the new TLs), this seems like a zero sum game. You could have just allowed your AAoA to increase by not taking on the new TLs.


Adding new TLs can improve your UTI. Again, this seems like zero sum UTI games vs just paying down the balances that were already reporting.


What else is there?


Why would your scoes go up from just maintaining the credit you have? Does it? (I'm new, this seems to be the party line, am I misinformed?)


edit: (This seemed appropriate, if mangled) Mary, Mary, quite contrary, How does your garden grow?

2017-09-09 FICO 08: EQ 677, TU 640, EX 705
2018-06-16 FICO 08: EQ 688, TU 718, EX 718
Gardening again until... undecided

Message 1 of 28
Senior Contributor

Re: Inside Baseball, why does gardening work?

That AAoA is really important for FICO scoring -- in fact, I think it's one of the most important areas because it likely is the reason for being in various "scorecards" or "buckets" if you have an otherwise clean profile.


Someone with lower than 12 months AAoA may be in the lowest "clean" scorecard/bucket.  This has the effect of giving you a FICO score ceiling that you can't get beyond no matter what, other than age.


It appears the different scorecards line up well with the AAoA in years: 2 year buck, 3 year bucket, up to 6ish years bucket.


So if you keep lowering your AAoA, you never raise your ceiling.


The big thing to note is that if you're already under 12 months AAoA, adding new accounts lets them all age together, helping you make a thicker profile later.  Having 10 accounts with a 6 year AAoA means adding a new account barely dings your AAoA.  Having 1 account of 6 years of age dings you down to 3 years average if you add a second account.


Also, gardening wipes out the new account penalties (age of newest account, inquiries, etc).


FICO seems to bless anything that is 2 years old or more.  Accounts at 2 years are worth more (no new account penalties), inquiries are removed, etc.  Also, some lenders internallly look at how many accounts you've opened in 2 years and can decline you on that alone even if your FICO score is 800.

Message 2 of 28
Regular Contributor

Re: Inside Baseball, why does gardening work?

Ok, I see that AAoA is more important than I was giving it credit(pun unintended) for.

After posting, I remembered "payment history" as one of the score ingredients. Do we generalize this down to anything more than: X Y0-day lates in the last 12 months?

Ie, if I have more accounts that are reporting paid/happy per month than another similar profile (assuming only difference is number of accounts), would my score grow faster?

2017-09-09 FICO 08: EQ 677, TU 640, EX 705
2018-06-16 FICO 08: EQ 688, TU 718, EX 718
Gardening again until... undecided

Message 3 of 28
Senior Contributor

Re: Inside Baseball, why does gardening work?

It won't "grow faster" because of having more positive payments, within some considerations...


FICO gives you "free" points just for having 3 open credit cards, but the most boost happens when you have 5+ credit cards although cards #4 and #5 definitely ding you for up to 24 months.  After 24 months, 5 cards will give you a better FICO score than 3 cards, assuming you AZEO the balances.  There's that magical 24 month figure again.


There is probably some factor in FICO scoring based on number of derogatory accounts to total accounts (or derogatory payments to total payments) but it's obviously minimal because one derogatory payment is going to ding you so massively in general that it isn't worth pondering how to minimize it.  Payment history is all about showing 100%, no matter the number of accounts.


AAoA is supremely important to the point that I tell people to mini-garden if a new account will drop their AAoA into the next lowest year tier.  If youre at 3.3 years and a new account brings you to 2.9 years, garden for just long enough that a new account will keep you at 3.0 years.  AAoA looks at 3.1 years equal to 3.9 years so you want to try to keep your AAoA "in years" the same as you add accounts.  Again, a thick profile will be dinged less in AAoA than a thin one.


Also note there are data points that the age of old accounts (AOOA) may have an effect on FICO scoring/bucketing, but I don't know personally.  My oldest account is 11.1 years and it's an old closed AU that closed in 2008 so it will drop off soon from my report.  Will be interesting to see what happens to my FICO score when that happens.

Message 4 of 28
Community Leader
Valued Contributor

Re: Inside Baseball, why does gardening work?

I'm willing to drop one "tier," or threshold. Given that my AAoA is different on each report, I think it'd be impossible to acquire a new account without dropping a year on at least one of them.


Outside of scoring, a more practical reason for gardening is that many lenders don't like too many new accounts. Different lenders have different tolerances. ABCD mentions applying for more than one card at once and letting the accounts "age together." That's often good. But you could be in a situation where that isn't the best strategy. For instance, you might smell a Chase card in your future, and you want to stay within their 5/24 rule.


Also, we see people who are fortunate enough to start out with a really nice card. Because most mainstream cards require a bit of history, people in that situation should think in terms of letting that one card age. At that point, they don't want to add crummy cards simply to pad their history. Wait it out and app for something good. Smiley Happy

Message 5 of 28
Super Contributor

Re: Inside Baseball, why does gardening work?

Sort of piggy-backing off of what HO said above, in addition to AAoA you also have AoYA which drops to 0 every time you open a new line of credit.  So, while gardening increases AAoA, it also increases AoYA.  As HO suggested, lenders don't particularly care for seeing new accounts present.  This is especially true when applying for mortgages, where you'd want your AoYA to be at least 12 months, even better 24 months.  As ABCD mentioned earlier, these factors are key in scorecard assignment.  Of course, gardening also keeps inquiries off of your credit report, which presents a better look to lenders when you do decide to app for a product.


The only age related factor in FICO scoring that doesn't change if you aren't gardening is your AoOA, as new accounts have zero impact on the oldest account on your credit report.

Message 6 of 28
Community Leader
Super Contributor

Re: Inside Baseball, why does gardening work?

Great responses thus far.


Scorecard or bucket assignment for clean profiles is based on three things only:

    (1)  Age of Oldest Account (not AAoA)

    (2)  Age oif Youngest Account

    (3)  Total number of Accounts


The presence of significant derogs is also a scorecard assignment factor.  According to TT and others, a few Day 30 lates will not cause you to switch scorecards, though of course they do affect your score.  People with significant derogs are assigned to one of the "dirty" scorecards. 


#3 is FICO's way of determining whether your profile is "thin."  You don't need a lot of accounts here.  Steadily adding accounts as appropriate until you have a good 6+ is probably fine as a practical plan, and certainly not scarmbling to add junk accounts just because you think they might help this factor.  As Heaven says, only add accounts that you actually see a definite use for. 


Although Age of Oldest and not AAoA (#1) is the factor for scorecard assignment, ABCD is certainly right that as AAoA goes up (a consequence of gardening) it heps your score.  I.e. it is an important scoring factor, just not a factor for scorecard assignment.


A summary of many of the reasons gardening can help you:

*  Your AAoA goes up.

*  Your Age of Oldest goes up.

*  Your Age of Youngest goes up.

*  If you have lates, they become older and therefore their damaging effect can become softened.

*  If you have inquiries, they cease to have scoring impact after 365 days, even though they are still on your report.

*  If the scoring algorithm or prospective creditor is looking at how many of your accounts are "new", gardening will reduce both the total number and overall percentage of new accounts.

Message 7 of 28
Senior Contributor

Re: Inside Baseball, why does gardening work?

The one area I am still uncertain about is the rarely discussed topic of AoOA that is actually yours versus AU.


I know a lot of folks don't have any data points to share but I'm curious why MyFico would even mention it if it wasn't important.


For example, from my most recent MyFico 3B:




and also from my latest 3B at MyFico:




Those are curious minor differences.


To wrap up that information, I have a closed AU account that was opened January 2005 and closed October 2008.  I expect it to fall off within the next year.


On TU only, I have an account of my own that was opened May 2007 and closed June 2011 -- I think that one is the "11 years" credit history, but the AU account is my oldest account on my credit profile.  The closed account that was fully mine doesn't exist on EX or EQ and probably hasn't in forever.


Interesting that the AU account does show up on my credit reports, but it doesn't appear to offer me any aging help.


So basically MyFico (which is just a monitoring group well below the FICO scoring group) obviously is confused about what is my oldest account: is it my open account that I opened 5 years and 1 months ago, or is it my AU account which was opened more than 11 years ago but also closed about 10 years ago?


Very confusing for trying to figure out how FICO sees my oldest account.  Since that all goes away in the next year, I guess I'll know if I can pull FICO scores before and after those old accounts disappear, hopefully to share data points.

Message 8 of 28
Super Contributor

Re: Inside Baseball, why does gardening work?

CGID, good informative post above regarding score card assignment factors. Random question/thought, have you ever wondered why AAoA isn't a factor in scorecard assignment when it's seemingly more important than AoYA and AoOA?
Message 9 of 28
Community Leader
Super Contributor

Re: Inside Baseball, why does gardening work?

Dunno.  On the other hand, CC utilization isn't a scorecard assignment factor either, and it is way more important than any age factor.  So segmenting people into scorecards isn't done purely based on what factors matter most to one's score.  It's something else -- I guess those three factors produced the most relevant eight groups for some reason in FICO 8.  (Eight clean scorecards.)  If you had a FICO model developer here they might be able to say.  TT reads a lot of those white papers (I do not) so maybe he has an idea.

Message 10 of 28