AAoA and AAoOA Calculations

[cv91915]

I want to make sure I understand "Average Age of Accounts" and "Average Age of OPEN Accounts" so I can continue working on a calculator to preview any potential damage a new TL may do to either calculation.

 

Any flaws here?

 

If I add up the total amount of time since each and every TL reporting was opened, and divide by the number of TLs reporting, I should get "Average Age of Accounts" for that CRA.

 

If I exclude the ages of the accounts that are closed, and take an average of the only the remaining, open account ages, I should get "Average Age of OPEN Accounts".

 

Right?

 

FYI, I've left out the TL names to protect the innocent, and only included the "type" for my own amusement.

 

[road2freedom]

Looks right. I did something similar but never really looked at AAOOA. Is there a reason you are tracking that?

[hegemony]

closed accounts also factor into the multiple AAOA factors.

[PhoenixDown]

I have a lot of older closed accounts and based on what I am seeing, I think they help but not as much as having open accounts that far back would help. I was going to start tracking this too for that reason.

[cv91915]

Looks right. I did something similar but never really looked at AAOOA. Is there a reason you are tracking that?

This thread

 

http://creditboards.com/forums/index.php?showtopic=513428

 

has been in the back of my mind. The day finally came for me to create a spreadsheet to explore this area further.

[cv91915]

closed accounts also factor into the multiple AAOA factors.

My AAOA calculation above does include closed accounts.

[road2freedom]

I have a lot of older closed accounts and based on what I am seeing, I think they help but not as much as having open accounts that far back would help. I was going to start tracking this too for that reason.

 

I believe that's true, at least that the FICO 08 factors closed inactive accounts less, but does anyone really know how much? I really wonder if it's much at all.

[cv91915]

 

I have a lot of older closed accounts and based on what I am seeing, I think they help but not as much as having open accounts that far back would help. I was going to start tracking this too for that reason.

 

I believe that's true, at least that the FICO 08 factors closed inactive accounts less, but does anyone really know how much? I really wonder if it's much at all.

 

This is the area I'm hoping to explore further in this thread... the weight of each metric in various models, to the extent anyone really knows.

[BobWang]

Compare your results with USAA-CCMP, C$'s AAOA which includes all accounts,

 

versus Credit Karma which only calculates on open accounts.

[cv91915]

I want to make sure I understand "Average Age of Accounts" and "Average Age of OPEN Accounts" so I can continue working on a calculator to preview any potential damage a new TL may do to either calculation.

 

Any flaws here?

 

If I add up the total amount of time since each and every TL reporting was opened, and divide by the number of TLs reporting, I should get "Average Age of Accounts" for that CRA.

 

If I exclude the ages of the accounts that are closed, and take an average of the only the remaining, open account ages, I should get "Average Age of OPEN Accounts".

 

Right?

 

FYI, I've left out the TL names to protect the innocent, and only included the "type" for my own amusement.

 

 

 

Compare your results with USAA-CCMP, C$'s AAOA which includes all accounts,

 

versus Credit Karma which only calculates on open accounts.

 

Thanks, great idea.

 

The calculations are within the margin of error compared to USAA-CCMP for my Experian file.

 

 

Let me run through the same exercise with TU data and compare it to the CK calculation for AAOOA. I don't recall seeing AAOA on CK but I could be wrong.

[cv91915]

CK and my calculations are also within the margin of error for the AAOOA calculation:

 

[cv91915]

So, of the two average age metrics (open or all accounts), is one more important than the other, specifically for FICO scoring?

 

Now that we've established that I can do math (or at least Excel can, when properly instructed) I thought I'd move this to the next logical step...

[melikey]

I just checked my Walmart FICO and I noticed the following statement.

 

"Your FICO ® Score measures the age of your oldest revolving account and the average age of your revolving accounts".

 

 

Is that inaccurate?

Edited August 17, 2013 by melikey

[cv91915]

I just checked my Walmart FICO and I noticed the following statement.

 

"Your FICO ® Score measures the age of your oldest revolving account and the average age of your revolving accounts".

 

 

Is that inaccurate?

 

That implies "all" vs. just "open" accounts, but it doesn't come right out and say it...

[melikey]

 

I just checked my Walmart FICO and I noticed the following statement.

 

"Your FICO ® Score measures the age of your oldest revolving account and the average age of your revolving accounts".

 

 

Is that inaccurate?

 

That implies "all" vs. just "open" accounts, but it doesn't come right out and say it...

I was talking about only revolving accounts factoring. Is that not right?

[cv91915]

 

 

I just checked my Walmart FICO and I noticed the following statement.

 

"Your FICO ® Score measures the age of your oldest revolving account and the average age of your revolving accounts".

 

 

Is that inaccurate?

 

That implies "all" vs. just "open" accounts, but it doesn't come right out and say it...

I was talking about only revolving accounts factoring. Is that not right?

 

Oh, not sure. Good question though. When I checked the CK calculation vs. my spreadsheet I tried the numbers both ways (just revolving vs. all), but since I have no open installment loans and only one open real estate loan, I basically got the same answer either way I figured it.

[BobWang]

Open accounts *SHOULD* be given heavier weighting.

[cv91915]

Open accounts *SHOULD* be given heavier weighting.

 

OK, thank you.

 

Well, since I was successful yesterday D* my Amex to 1995, I think I'll start opening new Amex cards once the new date reports.

 

Revolvers this time. This should help this metric (AAOOA) A LOT.

 

Or is it AAoORA (Average Age of Open Revolving Accounts)?

 

I must be in at least the 200-level class.

Edited August 17, 2013 by cv91915

[road2freedom]

It should include all OC revolving and installment accounts.

[cv91915]

It should include all OC revolving and installment accounts.

 

So, all open OC accounts, except mortgages? Or is a mortgage considered an installment account?

[road2freedom]

 

It should include all OC revolving and installment accounts.

 

So, all open OC accounts, except mortgages? Or is a mortgage considered an installment account?

 

I guess technically it's a mortgage account, but for what I was describing, yes installment. It was basically to say it includes all loan types, just not collections and public records.

[cv91915]

 

 

 

 

It should include all OC revolving and installment accounts.

 

So, all open OC accounts, except mortgages? Or is a mortgage considered an installment account?

I guess technically it's a mortgage account, but for what I was describing, yes installment. It was basically to say it includes all loan types, just not collections and public records.

Thankfully I have no collections and no PRs.

 

Over time I have seen numerous people ask if they should close recently-opened accounts to increase their account age (and therefore improve their scores), and I swear that the conventional wisdom is always, "What, are you crazy? Only if there's an annual fee equal to or greater than the GDP of Sri Lanka."

 

I'm not questioning the feedback I'm getting in this thread, but I am trying to square to two paradigms.

Edited August 18, 2013 by cv91915

[cv91915]

 

 

 

 

It should include all OC revolving and installment accounts.

So, all open OC accounts, except mortgages? Or is a mortgage considered an installment account?

I guess technically it's a mortgage account, but for what I was describing, yes installment. It was basically to say it includes all loan types, just not collections and public records.

Thankfully I have no collections and no PRs.

Over time I have seen numerous people ask if they should close recently-opened accounts to increase their account age (and therefore improve their scores), and I swear that the conventional wisdom is always, "What, are you crazy? Only if there's an annual fee equal to or greater than the GDP of Sri Lanka."

I'm not questioning the feedback I'm getting in this thread, but I am trying to square to two paradigms.

Bump. Looking for feedback on my last post above.

[BobWang]

The hit from a new inquiry,

 

and a new account within 6 months,

 

whether or not it's immediately closed,

 

will usually outweigh any benefit from tweaking AAOOA.

 

FICO must use some algorithm that weights AAOA & AAOOA on a sliding scale,

 

to minimze "gaming" of the stats.

[cv91915]

The hit from a new inquiry,

 

and a new account within 6 months,

 

whether or not it's immediately closed,

 

will usually outweigh any benefit from tweaking AAOOA.

 

FICO must use some algorithm that weights AAOA & AAOOA on a sliding scale,

 

to minimze "gaming" of the stats.

The hit from a new inquiry,

 

and a new account within 6 months,

 

whether or not it's immediately closed,

 

will usually outweigh any benefit from tweaking AAOOA.

 

FICO must use some algorithm that weights AAOA & AAOOA on a sliding scale,

 

to minimze "gaming" of the stats.

Jeez, just WHO would try to game their scores?

 

That makes sense, I think... So a valid strategy could be to close accounts which are greater than six months old, but less than the AAOOA. The result of this would be a higher AAOOA without impacting AAOA.

 

Or maybe I'm over thinking this. Probably.