Credit Utilization / closing credit card

[Anonymous]

so I notice on Credit Karma app my credit utilizatoin is calculated only by the open credit card accounts. I have 2 accounts that are closed that I pay on and they are  not included. My question is ... My credit utilization is super high like 80 percent. I have a maxed out card for 4000. If I closed this account, still making my monthly payments, would that help my credit score? Would this account be excluded from the utilization ratio? Thank you in advance.

[Anonymous]

So I leanred this from experience: Closed credit card balances still factor into your FICO score. The one on Credit KArma is a VanatageScore and not what lenders use.so if i have two cards: Card #1 has a balance owing of 4000, and a 10,000 credit limit, and card #2 has a balance of 2000 and a credit limit of 5000. Your total utilization would be 40% ((4000+2000)/(10000+5000)).

If you close Card #1, it takes away that limit but keeps the balance into utilization equations so it would be: (4000+2000)/5000 or your overall util would be over maxed.

[Anonymous]

It wpuld NOT be excluded from your utilization.

Karma's front end summary page is innacurate for all of the following:

     * Evaluating age-related factors, like AAoA and also Age of Oldest Account

     * Evaluating utilization for people who's utilization is positive but veryl close to zero (Karma will display that as 0% whereas FICO rounds even a 0.1% utilization up to 1%)

     * Evaluating utilization if a person has closed accounts with positive balance

Karma's utilization summary is otherwise accurate.  Karma's chief value is in getting your EQ and TU reports as often as once per week.

[SouthJamaica]

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@Anonymous wrote:

so I notice on Credit Karma app my credit utilizatoin is calculated only by the open credit card accounts. I have 2 accounts that are closed that I pay on and they are  not included. My question is ... My credit utilization is super high like 80 percent. I have a maxed out card for 4000. If I closed this account, still making my monthly payments, would that help my credit score? Would this account be excluded from the utilization ratio? Thank you in advance.

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1. Forget about Credit Karma. It gives very misleading information. The only thing it's good for is the free credit report data, but the information about scoring is bogus. It is about Vantage 3.0 scores, which have nothing to do with FICO scores.

2.  In FICO scoring, credit card utilization is based on all accounts which appear in the reports, open and closed.

3.  No closing that maxed out account would not help your score in any way.

[rmduhon]

@marinersguy22 The card's limit isn't always removed from reporting when closed. If it is removed then yes, the card would be reporting way over limit. But if the limit is still being reported then the utilization won't change.