Representative volume element (RVE) has commonly been used to predict the stiffness of undamaged composite materials using finite element analysis (FEA). However, never has been an independently measured true microstructural damage quantity used in FEA to predict composite stiffness. Hence, in this work, measured fiber crack density in unidirectional fiber composite (generated using controlled fatigue loading) was used to predict reduction in stiffness using a RVE. It was found that the stiffness changes with change in depth of the volume element along the fiber direction and asymptotically reaches a constant value beyond a critical length called representative depth. It was argued that this representative depth should be more than the minimum of two characteristic length scales, twice of ineffective length and average length of broken fibers. Effective stiffness obtained from FEA of the optimum-sized RVE was in excellent agreement with the experimental results for given microstructural damage state.