impact of AAoA with scores over 800?

[expatCanuck]

Except for current credit-seeking behavior and an old CFA (car loan), all is currently well in CreditLand, at least from a FICO score perspective, with scores ranging from 812 to 829 (specs in footer).

That said, my open real estate loans and all but three of my cards are infants, anywhere from 2 to 15 months old.  Depending on the bureau, my current AAoA  ranges from 6y4m to 7y3m.  As old closed accounts age off, those values will fall.

So, assuming that my Payment History remains clean, the Amount of Debt stays controlled (less than 8% aggregate, less than 28.9% for any one card), Credit Mix remains mixed, my oldest 20-year-old card remains active and, at some point, I stop applying for cards, does anyone have a sense of how much impact a (say) 4-year AAoA will have as compared with the 'optimal' (?) 7-year, 8-month AAoA?

[Anonymous]

It's definitely tough to say, as AAoA thresholds aren't well documented and how many points are realized from crossing those thresholds isn't well known or consistent either.  My shooting from the hip guess though would be roughly 10 points per year on AAoA, give or take.  So, if you're dropping (say) 2.5 years in AAoA but your AoOA is remaining constant, perhaps 25 points or so could be lost.  I think that's a reasonable estimation, as if you were to drop your AAoA to 1 year [AoOA of course would have to drop as well] scores around 740-750 could be had.

[expatCanuck]

Thanks, BBS.
All reasonable, tho' 10 points per year may be a little high. I say that because my TU score (829) has the lowest reported AAoA (6-4), and the most recent INQ (2 weeks old). EQ is 814 and, while it has an additional INQ (2.5 months old), it reports an AAoA almost a year older (7-3).

The more I think about it (and I should stop), the less impact I think the AAoA decline is likely to have.

[Anonymous]

I also can see a case where diminishing returns and/or signal strength of AAoA changes as it increases.  For example, an AAoA drop from 92 months to 80 months is less meaningful than a drop from 20 months to 8 months, even though they are both 12 month drops.

[Anonymous]

BTW, some scoring systems are known to penalize you when your AoOA is far higher than your AAoA.  The logic behind this is probably that such a situation necessarily implies that you have many extremely young accounts, i.e. that you began opening lots of accounts in a short time frame, fairly recently.

The LN CBIS scoring model is one of the most transparent models out here, in its extremely detailed list of reason codes, and it does this for sure.

[Anonymous]

That's interesting, CGID.

It's possible then, under certain scoring models, than an extremely old account falling off ones CR could actually result in a score gain.  Say an AoOA of 18 years is all that's required for max points under X scoring model.  If a person possesses a AoOA of 40 years and their next oldest account is 20 years and that 40 year account drops off, their AoOA gets cut in half, while still being in the "best" place (>18 years).  Their AAoA in this example for the sake of numbers may fall from 9 years to 8 years, making their AoOA to AAoA variance drop from 31 years to 12 years.  Just something interesting to think about and consider.

[expatCanuck]

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@Anonymous wrote:

BTW, some scoring systems are known to penalize you when your AoOA is far higher than your AAoA.  The logic behind this is probably that such a situation necessarily implies that you have many extremely young accounts, i.e. that you began opening lots of accounts in a short time frame, fairly recently.

The LN CBIS scoring model is one of the most transparent models out here, in its extremely detailed list of reason codes, and it does this for sure.

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Thanks, CGiD.  My history certainly fits that profile. Of 14 active accounts, I've opened 11 within the past 20 months; my oldest is 20 years young..

[Anonymous]

I think the impact of AAOA is going to be dependent upon scorecard of course, but IMHO, the thresholds I’ve been able to isolate have been 2 to 3 points each and I don’t think they’re any closer than 12 months apart. And I say all of this meaning for profiles with AAoA above 5 years, as I believe the point gains become less as the age increases.

@CGID That is awesome information, can you please guide me to the source, so I can read more about it please?

[SouthJamaica]

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@expatCanuck wrote:

Except for current credit-seeking behavior and an old CFA (car loan), all is currently well in CreditLand, at least from a FICO score perspective, with scores ranging from 812 to 829 (specs in footer).

That said, my open real estate loans and all but three of my cards are infants, anywhere from 2 to 15 months old.  Depending on the bureau, my current AAoA  ranges from 6y4m to 7y3m.  As old closed accounts age off, those values will fall.

So, assuming that my Payment History remains clean, the Amount of Debt stays controlled (less than 8% aggregate, less than 28.9% for any one card), Credit Mix remains mixed, my oldest 20-year-old card remains active and, at some point, I stop applying for cards, does anyone have a sense of how much impact a (say) 4-year AAoA will have as compared with the 'optimal' (?) 7-year, 8-month AAoA?

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I believe it would have a very large impact, like 20 or 30 points or even more in FICO 8, and an even larger impact on the mortgage scores.

[Thomas_Thumb]

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@Anonymous wrote:

That's interesting, CGID.

It's possible then, under certain scoring models, than an extremely old account falling off ones CR could actually result in a score gain.  Say an AoOA of 18 years is all that's required for max points under X scoring model.  If a person possesses a AoOA of 40 years and their next oldest account is 20 years and that 40 year account drops off, their AoOA gets cut in half, while still being in the "best" place (>18 years).  Their AAoA in this example for the sake of numbers may fall from 9 years to 8 years, making their AoOA to AAoA variance drop from 31 years to 12 years.  Just something interesting to think about and consider.

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The LN CBIS model  negatively impacts score for a lengthy AoOA if and only if the file has an AAoA under 7 years 8 months (code 3069). Substantial new credit behavior with an otherwise lengthy age of file may be indicitive of an older person running low on funds that may be more likely to file a claim. It could also be a young person using an AU account to inflate credit history. Perhaps account churners also correlate to increased claim frequency.

BTW: Per code 3011 it is best to have an AAoA over 7 years 6 months anyway.