CarefulBuilder14 wrote:That does make sense. If a person has been on time with all their bills in the last three years, that's a pretty good indication they are at least organized. Of course, a bankruptcy five years in the past might tell a different story of financial health.
Average age of accounts is entirely different from payment history. Bankruptcy is another, entirely different, thing from either. (It's possible, though very unusual, to go bankrupt without having a negative payment history. I'm actually not sure bankruptcy, per se, is reflected in a FICO score, but it's a drop dead no-way-dude flag for many lenders.) If you have bunch of lates, an average age of accounts that bolstered by a pocket full of amexes backdated to 1066 isn't going to help you.
The importance of lates does decrease over time, at least for 30 and 60 day ones, and one or two that are more than four years old won't hurt you too much. More than a handful, or 90 and 120 lates, and you're hosed. The handling of lates is something that varies widely between models (even between different FICO models). The usual point of a score used for new accounts is "how likely is this person to become 90 days late in the first N months" (N is usually 24, but can be different, depending on the product invovled.), and long lates make it more likely. Short lates, to some point, don't.
Once they decide to approve you, most lenders use a different set of criteria (a different score, or a combination of scores, or something proprietary) to figure out what your rate and limits will be. For instance, a lender might approve two people with the same fico and incomes, one with a history of lates, and one not, and give the guy with lates a higher interest rate and higher limits -- because he carries a balance and pays interest. or they might not, because they have different goals for the product.