Effect of credit card closure on FICO scores

[Anonymous]

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@Anonymous wrote:

I still think you should find out what the scoring implications will be.  It's fine to make the choice you are making, but you should know in advance how it will work.

If it works the way I guessed it might, then your total utilization will be well over 100% as will your individual utilization for that card.  When that happens it can (as I mentioned before) cause your other creditors to freak out, especially if it happens for a number of months in a row (as it will).

It might be worth reaching out to your existing creditors, letting them know that they might see a weird shift in your CC util and why,, letting them that this is actually a good sign rather than a bad one, etc.  I'd also make sure I was aggressively paying down all my other cards, so that these creditors feel good about your own risk.  You should make sure you are paying more than the minimum pay ment on all other cards.

It might be useful to obtain a description of what the CC issuer is committing to in writing, rather than your memory of what was orally told you by a rep over the phone.

Again, I'd see if you can find someon here on the Forum more knowledgeable to guide you, since all I can give you is guesses.

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I would not take a stick and poke the bear. Don't worry it's alive. Thus, creditors will see on their own. Let it be and see how/if they react.

It would not be in your best interest to notify other creditors that you are on a hardship program. You will open a can of worms you will regret. 

[Anonymous]

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@Anonymous wrote:

I've decided to take the offer. I agree with Canadian-in-Seattle...My financial health is more important than my FICO score. I will be sure to return to this thread with updates on any effects on my credit score. As of today, my Experian/Equifax/Transunion scores are 692/717/696.

Thanks for the feedback everyone.

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Are those your scores with the card already reporting maxed on this card?

[Anonymous]

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Are those your scores with the card already reporting maxed on this card?

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Yes, those scores are with the card 100% maxed out. I've confirmed that they will show the card as "consumer closed" and the balance will continue to be reported as normal. Payment plan is set up and they require automatic deduction ona set day of the month, which is fine. I've never been late on any of my cards, so it will be interesting to see if there is any change. I agree with not reaching out to other creditors as it will raise red flags.

[Anonymous]

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@Anonymous wrote:

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Are those your scores with the card already reporting maxed on this card?

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Yes, those scores are with the card 100% maxed out. I've confirmed that they will show the card as "consumer closed" and the balance will continue to be reported as normal. Payment plan is set up and they require automatic deduction ona set day of the month, which is fine. I've never been late on any of my cards, so it will be interesting to see if there is any change. I agree with not reaching out to other creditors as it will raise red flags.

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Then you most likely will not have any new score impact. It will just hold your scores down until paid due to 100% utilization.

[Anonymous]

Hey Donny.  It may be premature to suggest that the OP will not experience any new scoring impact.  His current total utilization is 35/45 = 78%.  His new total util may jump to a much higher number: 35/15 > 200%.

This is how it will play out if his closed card is assigned a CL of $0, and yet his 30k balance is still included in the numerator of his total util calculation.  I am not sure that is how FICO does it, but I think I have heard that's how it plays out.

If it does, he will experience a massive jump in total util, which will likely have a damaging effect on his score.

Until we know for sure how the total U calculation works for closed accounts, it seems to me that we can't say that his score will remain stable.

[Anonymous]

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@Anonymous wrote:

Hey Donny.  It may be premature to suggest that the OP will not experience any new scoring impact.  His current total utilization is 35/45 = 78%.  His new total util may jump to a much higher number: 35/15 > 200%.

This is how it will play out if his closed card is assigned a CL of $0, and yet his 30k balance is still included in the numerator of his total util calculation.  I am not sure that is how FICO does it, but I think I have heard that's how it plays out.

If it does, he will experience a massive jump in total util, which will likely have a damaging effect on his score.

Until we know for sure how the total U calculation works for closed accounts, it seems to me that we can't say that his score will remain stable.

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We will see what happens.

OP be sure to update us when the account is closed.

[Anonymous]

I promised to come back into this discussion and update everyone on the results of negotiating the closing of my highest balance credit card.

Citibank agreed to close the account, but not report it in such a manner that was detrimental to my credit scores. In return, I got a 0% deal over 5 years, paying $501 per month until the card is paid off.

The difference in all three credit reports after the card closing is a mere 10 points on each report. I will continue to update this thread if things change over the next few months, but I will take the small hit if it means getting out from under this card that has plagued me for 15 years, without paying a cent in interest while doing so.

Thanks for all the initial feedback. I'm glad I went this route and perhaps it should be noted that Citibank was very understanding during the situation.

[Anonymous]

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@Anonymous wrote:

I promised to come back into this discussion and update everyone on the results of negotiating the closing of my highest balance credit card.

Citibank agreed to close the account, but not report it in such a manner that was detrimental to my credit scores. In return, I got a 0% deal over 5 years, paying $501 per month until the card is paid off.

The difference in all three credit reports after the card closing is a mere 10 points on each report. I will continue to update this thread if things change over the next few months, but I will take the small hit if it means getting out from under this card that has plagued me for 15 years, without paying a cent in interest while doing so.

Thanks for all the initial feedback. I'm glad I went this route and perhaps it should be noted that Citibank was very understanding during the situation.

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This is fantastic news. I really appreciate Citi valuing you as a customer and giving you this deal. Kind of want to do more business with them now.

[NRB525]

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@Anonymous wrote:

I promised to come back into this discussion and update everyone on the results of negotiating the closing of my highest balance credit card.

Citibank agreed to close the account, but not report it in such a manner that was detrimental to my credit scores. In return, I got a 0% deal over 5 years, paying $501 per month until the card is paid off.

The difference in all three credit reports after the card closing is a mere 10 points on each report. I will continue to update this thread if things change over the next few months, but I will take the small hit if it means getting out from under this card that has plagued me for 15 years, without paying a cent in interest while doing so.

Thanks for all the initial feedback. I'm glad I went this route and perhaps it should be noted that Citibank was very understanding during the situation.

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That is good news, and if I had seen the thread in February I would have recommended taking this deal. I have had several cards closed, either by the lender or by me, with balances that tended to be rather large. In some cases it was to freeze terms and maintain good interest rates to have a chance to pay them down.

My experience in tracking how these are reported in my current scores is that they really are not a factor. Closing the 100% utilization card changes the way it is included in your scoring, in my opinion for the better. Getting a 0% APR deal for 5 years is just a major win to be able to pay down the card.

Congrats on the deal, and best of luck for the paydown!