Some pretty basic questions - I believe...

[KimberH]

Ok...

So in 2002-2006, we had a business.

Unfortunately, we made the decision in Dec 06 to give it up and go back to corporate where we both held high paying jobs. We were in debt and should have made this decision sooner.

We did not declare bankruptcy. Rather, we entered into agreements with all our creditors and ended up getting "real jobs" - back in corporate America.

At the time, we were over $112k in debt. ( I know......) - my Amex was over $40k alone.

Now, we are down to about 56k. Seems like a lot, but considering, not so much. We started making agreements in late 06, early 07

My questions are as such:

When I entered into payment agreements, most of the accounts were closed. It shows reporting at the CL, and then shows the current balance, paid on time. I know it is weird but since the account is closed, does FICO use it in the credit utlilization (CL vs balance)?

My FICOs are 634 (EQ) and 645 (TU). I recieved a CAP ONE card (orig $1k, now at $2k limit), JCPennys (orig $200, raised this month to $400), and Best Buy MC at ($500, raised this month as well to $800) since then. Target ($200, not going anywhere)

I pay all my cards now in full, I let CAP ONE carry a balance for the month but will pay it off next week.

Not looking for credit (although I would like to get a card to Lowes or similar) for repairs to the house

Am I doing anything wrong?

[YoungEntrepeneur]

It looks like you're doing great and on the right path. Just keep paying the debt down and you will see your scores rise significantly.

BTW, did you arrange PFD's when you made agreements with your OC's?

[Anonymous]

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@KimberH wrote:

Ok...

So in 2002-2006, we had a business.

Unfortunately, we made the decision in Dec 06 to give it up and go back to corporate where we both held high paying jobs. We were in debt and should have made this decision sooner.

We did not declare bankruptcy. Rather, we entered into agreements with all our creditors and ended up getting "real jobs" - back in corporate America.

At the time, we were over $112k in debt. ( I know......) - my Amex was over $40k alone.

Now, we are down to about 56k. Seems like a lot, but considering, not so much. We started making agreements in late 06, early 07

My questions are as such:

When I entered into payment agreements, most of the accounts were closed. It shows reporting at the CL, and then shows the current balance, paid on time. I know it is weird but since the account is closed, does FICO use it in the credit utlilization (CL vs balance)?

My FICOs are 634 (EQ) and 645 (TU). I recieved a CAP ONE card (orig $1k, now at $2k limit), JCPennys (orig $200, raised this month to $400), and Best Buy MC at ($500, raised this month as well to $800) since then. Target ($200, not going anywhere)

I pay all my cards now in full, I let CAP ONE carry a balance for the month but will pay it off next week.

Not looking for credit (although I would like to get a card to Lowes or similar) for repairs to the house

Am I doing anything wrong?

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Welcome to the forum!!!!

And  am sorry to hear about your bad luck. 

My understanding is that for FICO calculation, an account cannot be considered both closed and having a credit limit.

So yes you are being penalised. Yes those accounts are probably dragging your overall scores down.

The joys of FICO do dictate however that once your closed with balance accounts are paid you will benefit from the payment history.

This simply one of those situations that only time and getting the accounts paid off will cure.

I am in the same boat. I fled my last job probably 8 months after I should have and am paying my debt off as well.

[llecs]

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KimberH wrote:

When I entered into payment agreements, most of the accounts were closed. It shows reporting at the CL, and then shows the current balance, paid on time. I know it is weird but since the account is closed, does FICO use it in the credit utlilization (CL vs balance)?

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Actually, closed CCs w/ a balance, and showing a CL, still factor into utilization as if the CC were open. Once you pay it to $0, then the CL is removed for your utilization.

[Anonymous]

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@llecs wrote:

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@KimberH wrote:

When I entered into payment agreements, most of the accounts were closed. It shows reporting at the CL, and then shows the current balance, paid on time. I know it is weird but since the account is closed, does FICO use it in the credit utlilization (CL vs balance)?

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Actually, closed CCs w/ a balance, and showing a CL, still factor into utilization as if the CC were open. Once you pay it to $0, then the CL is removed for your utilization.

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+1

Common misconception on closed accounts with balance is that the CL doesn't count....as llecs says, when closed with balance, the CL is still factored in utilization AS REPORTED.  If they report a ZERO CL then you are getting screwed on utilization and you should call the CCC and ask for it to be corrected until the balance is paid.  Reporting a CL while closed doesn't put the CCC in any risk, but it helps you immensely.  But as long as the reported CL is correct (not zero), then you just have the normal calc as though it were open.

Message Edited by txjohn on 08-21-2009 08:00 AM

[Anonymous]

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@Anonymous wrote:

Common misconception on closed accounts with balance is that the CL doesn't count....as llecs says, when closed with balance, the CL is still factored in utilization AS REPORTED.  If they report a ZERO CL then you are getting screwed on utilization and you should call the CCC and ask for it to be corrected until the balance is paid.  Reporting a CL while closed doesn't put the CCC in any risk, but it helps you immensely.  But as long as the reported CL is correct (not zero), then you just have the normal calc as though it were open.

Message Edited by txjohn on 08-21-2009 08:00 AM

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I knew I wasn't crazy.

As some lenders do report your CL as Zero when you close the account.

I really should not post at 0500 when I cannot sleep