Does getting closed accounts with $0 balance removed help score?

[PrinceCorwin]

Working on wifes score. She has quite a few old closed accounts from previous marriage with $0 balance and I don't know if I should try to have them removed or not.

[Anonymous]

Are you talking revolving (credit card) accounts?

If they are closed with a zero balance, they are not being factored into utilization as there is no balance and no credit limit being included into overall limits. 

There is no need to remove these accounts.  In fact, depending on their age, they are likely positively impacting AAoA by being there and adding to file thickness which is a favorable thing.  This is of course assuming that these accounts possess perfect payment history.

[Anonymous]

The short answer is no.

Longer more nuanced answer:

It's often difficult to get a closed account removed from a report, on the general grounds that you'd be asking for the removal of true accurate information.  Your wife really did have those accounts, they really do have a $0 balance, they really were closed on the dates indicated, etc.

Closed accounts do not in themselves hurt your scores, though if they are still very young they could lower her AAoA (Average Age of Accounts).

I can however suggest one rare corner case when you might want to work with the original creditor and try to beg for them to delete the account.

The account is a consumer finance account (a CFA).  That's typically a special account opened so you can finance one particular item, like a sofa at Rooms To Go, or a washer/dryer at Home Depot.  CFAs hurt your score.  Begging the creditor to remove it might be worth your while. 

[9CLINE]

@CreditGuyInDixie....Could you explin this further:"The account is a consumer finance account (a CFA). That's typically a special account opened so you can finance one particular item, like a sofa at Rooms To Go, or a washer/dryer at Home Depot. CFAs hurt your score."? On my reports HD shows as credit card as does the other credit cards I have,Lowes,etc...

[Anonymous]

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@9CLINE wrote:

@Anonymous....Could you explin this further:"The account is a consumer finance account (a CFA). That's typically a special account opened so you can finance one particular item, like a sofa at Rooms To Go, or a washer/dryer at Home Depot. CFAs hurt your score."? On my reports HD shows as credit card as does the other credit cards I have,Lowes,etc...

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Sure.  What would you like explained?

[PrinceCorwin]

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@Anonymous wrote:

The short answer is no.

Longer more nuanced answer:

It's often difficult to get a closed account removed from a report, on the general grounds that you'd be asking for the removal of true accurate information.  Your wife really did have those accounts, they really do have a $0 balance, they really were closed on the dates indicated, etc.

Closed accounts do not in themselves hurt your scores, though if they are still very young they could lower her AAoA (Average Age of Accounts).

I can however suggest one rare corner case when you might want to work with the original creditor and try to beg for them to delete the account.

The account is a consumer finance account (a CFA).  That's typically a special account opened so you can finance one particular item, like a sofa at Rooms To Go, or a washer/dryer at Home Depot.  CFAs hurt your score.  Begging the creditor to remove it might be worth your while. 

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So you're saying that my Conn's furniture account, which is not revolving, that I acquired to purchase $3000 in furniture is hurting my score? Actually it was $5000, but I currently owe $3000. Should I get it refinanced through NFCU?

[Anonymous]

Hello PrinceC.  Yes.  It is almost certainly hurting your account.  The consensus on the forum appears to be that CFAs continue to hurt your score after they are closed.  Since closed accounts often remain on your report for ten years after they are closed, that's ten years of harm in addition to the time it stays open.

I don't think anyone has shown for sure the the harm done by a closed CFA is exactly the same as that done by an open CFA, so you might get some benefit by paying it off.

Here's my advice:

Inspect the reason codes associated with all of your scores.  These are the (typically four) reasons listed next to your score that FICO identifies as hurting it.  If consumer finance account is not listed, then for some odd reason that account may not have been detetced as a CFA.  On the other hand, FICO might be penalizing you for it, but there are four other issues that are worse, and therefore it does not come up.

Regardless of what the reason codes say, just make reasonable attempts to get it paid off as soon as you can, without worrying about it too much.  As you get close to paying it off, you might want to contact the creditor, cry about how FICO is spanking you, and this will wreck your chances for a home, etc.  (That's a big exagerration, but say what you need to in order to get sympathy.)  Ask if you pay it off whether they will delete it completely from your report.

The good news is that in Amber CFAs don't count -- and as a prince you can also find a shadow world where they don't.

[RobertEG]

An account showing closed with $0 balance does not tell the entire tale.  It may or may not be delinquent.

Reporting of $0 current balance could mean either that the debt was paid or that it was sold to a debt collector.

If the debt was sold when delinquent, even if subsequently paid, the creditor would not have received any of the payment, and thus had a stiffed debt.

Good will deletion would thus be unlikely.

In a manual review, the reviewer would thus look at the payment history for delinquencies, and at the current status to determine whether it also shows that the $0 balance is based on discharge of the debt.

[SouthJamaica]

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@PrinceCorwin wrote:

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@Anonymous wrote:

The short answer is no.

Longer more nuanced answer:

It's often difficult to get a closed account removed from a report, on the general grounds that you'd be asking for the removal of true accurate information.  Your wife really did have those accounts, they really do have a $0 balance, they really were closed on the dates indicated, etc.

Closed accounts do not in themselves hurt your scores, though if they are still very young they could lower her AAoA (Average Age of Accounts).

I can however suggest one rare corner case when you might want to work with the original creditor and try to beg for them to delete the account.

The account is a consumer finance account (a CFA).  That's typically a special account opened so you can finance one particular item, like a sofa at Rooms To Go, or a washer/dryer at Home Depot.  CFAs hurt your score.  Begging the creditor to remove it might be worth your while. 

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So you're saying that my Conn's furniture account, which is not revolving, that I acquired to purchase $3000 in furniture is hurting my score? Actually it was $5000, but I currently owe $3000. Should I get it refinanced through NFCU?

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I wouldn't worry about it; just avoid such accounts in the future.

[PrinceCorwin]

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@Anonymous wrote:

Hello PrinceC.  Yes.  It is almost certainly hurting your account.  The consensus on the forum appears to be that CFAs continue to hurt your score after they are closed.  Since closed accounts often remain on your report for ten years after they are closed, that's ten years of harm in addition to the time it stays open.

I don't think anyone has shown for sure the the harm done by a closed CFA is exactly the same as that done by an open CFA, so you might get some benefit by paying it off.

Here's my advice:

Inspect the reason codes associated with all of your scores.  These are the (typically four) reasons listed next to your score that FICO identifies as hurting it.  If consumer finance account is not listed, then for some odd reason that account may not have been detetced as a CFA.  On the other hand, FICO might be penalizing you for it, but there are four other issues that are worse, and therefore it does not come up.

Regardless of what the reason codes say, just make reasonable attempts to get it paid off as soon as you can, without worrying about it too much.  As you get close to paying it off, you might want to contact the creditor, cry about how FICO is spanking you, and this will wreck your chances for a home, etc.  (That's a big exagerration, but say what you need to in order to get sympathy.)  Ask if you pay it off whether they will delete it completely from your report.

The good news is that in Amber CFAs don't count -- and as a prince you can also find a shadow world where they don't.

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Touche'. Perhaps someday, I will find my dear Avalon once again.