Closed Account that is not in collections

[Anonymous]

I have 2 accounts that are closed by the creditor but have not yet been sent to collections. I've actually been in discussion with both. One has agreed to make a payment arrangement with me. The other I am still in discussion with. My question is since this is not a collection account will this have a positive effect on my credit score? Also, one is a credit card should I decrease the credit utilization and if so will I see an increase in the score from that as well?

[gdale6]

Once they are PIF and stop updating the new balance then they can age in the eyes of Fico and your score begins to recover. As you pay them down they will update the balance and Fico will see the CO as if it just happened. In the longer run it is a net postive for you. Welcome to the board

[Anonymous]

So in a nutshell it would be best to just pay it off to see an increase?

[RobertEG]

Closed accounts are not positive simply because no collection is reported.

The account will not be positive if it has any adverse information reported under the account, such as monthly delinquencies or a charge-off.

Those adverse items clearly affect scoring.

A primary reason for creditors closing accounts is that they are delinquent, and thus they wish to prevent the consumer from increasing the debt.

Yes, closed credit cards continue to be included in your % util scoring, so paying down the balance will improve your % util.

However, once paid off and closed, the account will cease to be included in your % util scoring.