What Is the Average Age of Accounts and Why It Matters for Credit
Two credit files can have identical balances and payment histories and still score differently, sometimes because of how long, on average, their accounts have existed.
The quick answer
Average age of accounts is the mean length of time all of a person’s credit accounts, open and sometimes closed, have existed, and it’s one of the factors most scoring models use to estimate reliability over time. A longer average age generally supports a higher score, since it reflects a more established track record, while opening new accounts or closing old ones can pull that average down.
How the average is actually calculated
The calculation adds up the age of every account on the file and divides by the number of accounts, meaning both very old and very new accounts pull the figure toward the middle. This is why a single new account has a bigger relative effect on someone with only one or two other accounts than on someone with a long list of older ones, since there’s less existing history to balance out the new addition. This is also why opening several accounts at once, rather than spacing them out, tends to have a more noticeable short-term effect on the average than opening the same number gradually over a longer period.
Why length of history matters to a scoring model
A longer track record simply gives a scoring model more data points to evaluate, and a longer history of on-time payments across established accounts is generally viewed as more reliable than a short one, even if the underlying habits are similar. This is part of why building credit from nothing takes real time regardless of how carefully the accounts are managed, since age itself is a factor that can’t be accelerated beyond the calendar. It’s one of the few factors that can’t be improved through any deliberate action beyond simply keeping accounts open and in good standing as time passes.
Why closing an old account can hurt
- It can remove that account’s age from the calculation once it’s no longer on the report, which can lower the average, though closed accounts in good standing often stay on file for years before dropping off.
- It reduces total available credit if the closed account was revolving, like a credit card, which can raise overall utilization even if spending habits don’t change.
- It removes a positive contributor to the payment history record going forward, even though past history from the closed account typically remains for a period of time.
When closing an account still makes sense
Average age of accounts is one factor among several, and it doesn’t override every other consideration. An account with a high annual fee that no longer fits someone’s situation, or one tied to a specific concern about fraud, might reasonably be closed despite the potential effect on average age, a tradeoff that often comes up when thinking through how many cards to keep active. The factor is worth weighing, not treating as an absolute rule against ever closing an account.
What to weigh
Average age of accounts rewards patience and consistency more than any single action, since it’s a factor that only moves with time and the number of accounts on file. Keeping an old, low-cost account open, even one used only occasionally, is a common way to preserve that average while still adjusting other parts of a credit file as needed. This makes it one of the more patience-dependent parts of a credit file to influence.