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Question: AAOA, Thin File and CC


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This is a quick spreadsheet from my latest free Experian Fico Report. Experian says my oldest account is 22.6 years. It is an open in good standing Ben Bridge Jewelers cc that I have not used in probably 20 years. Interesting that Ben Bridge told me five years ago they never close inactive accounts so it is really helping my age of accounts.

 

My other accounts are really new as you can see in the spreadsheet. I have been gardening for almost a year because I didn't want to do more damage to my AAOA's which is at 5.8 years.

 

If I applied for say a CSP card what would be my AAOA's? How do I calculate it and do you think I should lay low and wait another year or two before applying for another cc?ezbqnrC.jpg

 

 

Edited by creditmaze
butter fingers...sorry
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Ok, Average Age of Accounts:

 

I'm not checking my calculations against your actual account ages, so if there's a discrepancy, that's why ...

 

That said, with 6 reporting accounts and a reported average age of 5.8 years, then the sum of the age of each individual account is (6 * 5.8) = 34.8 years.  Once you add a new account into the mix, your adjusted average age will be (34.8 / 7) = 5.0 years.

 

So, what happens if you wait a year before applying for a new account, rather than applying right now?  Let's look at where your average age stands in one year's time:

 

If you apply now, and then a year elapses, then your average age will go from the 5.0 years we just calculated, to 6.0 years.

If you wait and apply in a year, then your average age of your current accounts will advance to 6.8 years (5.8 + 1).  Multiply that by 6 to get your cumulative age (40.8) and divide that result by 7 to get your adjusted age with a new account at that time and you get 5.8 years (0.2 less than if you open a new account now).

 

------------

 

Waiting to open an account won't reduce your ultimate average age vs opening an account now; just the opposite will result.  In fact, the earlier you open accounts, the more beneficial it will always be for your average age of accounts.

 

The truth is that the best move in managing your accounts (and their age) is simply to be selective about which accounts you open.  Strive to only open accounts that strongly serve your financial interests and don't end up being useless deadwood.  That strategy will help keep your average age of accounts strong.

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At your stage unless you're gaming FICO for entertainment purposes and that's your highest priority, open whichever accounts best suit your needs at the time they'll be useful.

 

Products change all the time.  By the time your AAoA reaches some target/goal threshold, the product may be discontinued, benefits diluted, etc.

 

The time to act is when a good opportunity presents itself.

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You've already got great answers here, but I'll echo anyway with more specifics. 

 

Take the sum of months/years open for all open accounts, divide by number of accounts. 

 

From your spreadsheet:

Accounts on your list : years open

1: 22.6 years

2: 4.25

3: 3.16

4: 2.92

5: 1.5

6: 0.58

 

Total =  35.01

Average = Total / 6 = 5.835 years

 

Add an additional account:

Total stays 35.01

New Average = Total / 7 = 5.0 years

 

Add two new accounts:

Total stays 35.01

New Average = Total / 8 = 4.37 years

 

 

 

Your FICOs are great. Put them to use for you and get the cards that would garner the best rewards for your spending.  Any dings on average age of accounts is temporary, and a thicker file helps with that in the long run.

 

 

If you want to add more info to your spreadsheet, you can have it calculate the current open duration of each card by using '=(TODAY()-B4)/365' (B4 being the reference to the first card open date), copy paste on down the line. Then you can sum them all and divide as you wish.

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