Originally Posted by
LAX_Esq
Let's take this scenario:
- Someone has 3 cards, which are 7, 4 and 1 years old.
One year from now, what is the average age of accounts if: (1) they close the 1 year old card today vs. (2) they do not close the 1 year old card today?
Explain how it works and where I'm wrong:
- Their current average age of credit is 7+4+1=12 divided by 3 accounts, which gives 4.
- If they keep all 3 cards open, one year from now, their accounts are now 8, 5 and 2 years long. And their average age of credit is 8+5+2= 15 divided by 3 accounts, which gives 5.
- If they closed the 1 year old card today and kept the other 2 cards open, one year from now their accounts are 8, 5 and 1 years long. And their average age of credit is 8+5+1 over 3, for 4.67.
AAoA doesn't distinguish between open or closed tradelines. So the average in your example goes from 4 to 5 after one year because they haven't added or removed any tradelines. The average will age at the same rate time passes unless you add or subtract tradelines. Open or closed has no effect on AAoA.