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What is a good Average Age of Account ? (AAOA)

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Super Contributor

Re: What is a good Average Age of Account ? (AAOA)


@JR_TX wrote:

@AverageJoesCredit wrote:
Lol , whats your Fico? 849, and yours? $$$😁 i want one of thoseSmiley Wink
@OP ; Some Seasoned myFICOers here would even argue that a 750+ is better than an 850 in terms of “lender appeal” as they know right off the bat that the 850 carries zero profitability for them whereas a 750 though a bit riskier brings $$ into their pockets!

Hi AverageJoe.  I am guessing that by "lender" you mean CC issuer.  It's conceivable that some CC issuers like mid 700s better than 840+ for the reasons you cite.  Good point.

 

There are other kinds of lender products, however.  With installment loans there would be no advantage to a 750 vs. an 850 (the 750 would typically give them more of a loss given the higher rate of default).

Message 11 of 22
Community Leader
Senior Contributor

Re: What is a good Average Age of Account ? (AAOA)

After my experience with a card changing banks, I want a cushion. The process put two accounts on my report instead of one (one open, one closed), and my scores went both up and down. A mortgage score dropping by close to 15 points was the most significant. That score is still above 800. But had I been in the mortgage process when that unexpected event happened and my middle score was 750, I'd have been in trouble.

Message 12 of 22
Community Leader
Mega Contributor

Re: What is a good Average Age of Account ? (AAOA)


@HeavenOhio wrote:

After my experience with a card changing banks, I want a cushion. The process put two accounts on my report instead of one (one open, one closed), and my scores went both up and down. A mortgage score dropping by close to 15 points was the most significant. That score is still above 800. But had I been in the mortgage process when that unexpected event happened and my middle score was 750, I'd have been in trouble.


So, if one was to apply for a mortgage, would 760 at the time of application suffice as middle score in terms of getting the best rates? 

EX 754 EQ 774 TU 752


Message 13 of 22
Frequent Contributor

Re: What is a good Average Age of Account ? (AAOA)


@JR_TX wrote:

 

@OP ; Some Seasoned myFICOers here would even argue that a 750+ is better than an 850 in terms of “lender appeal” as they know right off the bat that the 850 carries zero profitability for them whereas a 750 though a bit riskier brings $$ into their pockets! 

 


I very much doubt this.  The typical churner/gamer profile is in the 750-800 range, and they cost the banks substantial money whereas the 850 scorer is at least earning them some money.  When it comes to 750+scorers, banks are really only concerned with 2 groups to identify -- Bust out Fraud and Gamers.  850 scorers don't fit into either of these categories.  It's true that banks earn a lot on interest, but only with a risk associated with it.  They'll take as many 0 risk borrowers as they can just for the merchant fees, as it's basically risk-free revenue.



Message 14 of 22
Super Contributor

Re: What is a good Average Age of Account ? (AAOA)

The last I heard, 740 gets you best rates on the mortgage, 760 gets you best rates on the PMI.

Message 15 of 22
Frequent Contributor

Re: What is a good Average Age of Account ? (AAOA)


@CreditGuyInDixie wrote:

The last I heard, 740 gets you best rates on the mortgage, 760 gets you best rates on the PMI.


Yeah, but shouldn't pay PMI ever.



Message 16 of 22
Super Contributor

Re: What is a good Average Age of Account ? (AAOA)

Just become someone possesses an 850 score as opposed to a 750 score doesn't mean that they're less profitable than the 750 person. 

 

Someone with an 850 score may be paying a substantial amount of interest every month to their creditors, making them a ton of money and the 750 guy may have never paid a cent of interest in his entire life.

Message 17 of 22
Super Contributor

Re: What is a good Average Age of Account ? (AAOA)

Great observation by BBS.  Carrying a balance (vs. reporting a balance) is not detected by the current FICO models.  If that changes in FICO 10 then interest generating behavior will result in a much lower score.

 

There is a limit to how much interest you could generate by FICO's insistence on hyperlow utilization.  Still a person with a 250 credit limit could easily generate interest on 20k (and still have an 850 score) which as BBS says is a lot.

Message 18 of 22
Super Contributor

Re: What is a good Average Age of Account ? (AAOA)

I'm all for the eventual use of trended data as part of the scoring algorithm, as I do believe that it's a great factor to be used in determining risk and of course accordingly assign a score to go along with that risk.

 

Using the numbers from above as an example, perhaps someone with an 850 score today (FICO 8, no trended data) that's been carrying balances for a very long time and paying a ton of interest would be hit with a significant penalty, say 50 points, taking them down to 800.  Of course 850 vs 800 makes no difference in terms of being able to obtain the best products at the best rates, but it does say something upon a MR.  Conversely, perhaps the 750 score person that exhibits pure transactor behavior and never pays a penny of interest gets a 50 point boost, taking him to 800.  When considering this factor, we can then see that these 2 individuals may both arrive at an 800 score and be viewed as relative equals in terms of risk.  Obviously these numbers are just there for the sake of discussion.

Message 19 of 22
Senior Contributor

Re: What is a good Average Age of Account ? (AAOA)


@VIPERLTDMYFICO wrote:

What is a good Average Age of Account ?

 

When I did the math on all my OPEN credit card/charge cards =

Experian = 1 years 4 months and 21 days

Eequifax : 1 years 3 months and 24 days

 

Thoughts anyone ?

 


A decent AAoA is 2 years, a very good AAoA is 5 years and an excellent AAoA is 8 years. As mentioned elsewhere, AAoA includes all open and closed accounts.

 

A Fico 8 score of 760 can be achieved even with a thin file having only a couple revolving CCs at 2 years without much difficulty if the profile is clean. Don't even need to "optimize" aggregate utilization - any utilization below 29% should be sufficient. This assumes youngest account is a minimum of 12 months old. If you have new accounts under 12 months age, you may need to offset the new accounts penalty by reducing utilization to the optimal range of below 9%.

Fico 8: .......EQ 850 TU 850 EX 850
Fico 9: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
VS 3.0:...... EQ 835 TU 835 EX 835
Fico 8 BC:. EQ 892 TU 900 EX 900
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 20 of 22
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