Understanding FICO® Scoring

[tisch0791]

---

my-own-fico wrote:

I was wondering in which ways a card account can be closed when the balance hasn't yet been fully paid down?

Also, it may be worth considering that not all cards, such as charge and NPSL, figure in utilization.

---

I have voluntarily closed accounts that have a balance when the bank notified me of an interest rate increase.  Since I didn't need to use the cards anymore and didn't agree to the rate increase I just locked the interest rate down by closing it from any future use.  And years ago when hubby and I had some financial problems, the bank closed an account for us.  However we are still responsible for the balance!

[tisch0791]

---

llecs wrote:

OP, per FICO scoring, a closed CC with a balance and a reported CL are fully factored into utilization, not just the balance. It'll remain factored in for as long as the balance reports anything other than $0. Once it is paid off, then FICO will ignore both the balance and CL forever. In other words, that closed TL helps you quite a bit now. However, focus on paying down balances as you can't keep a balance on it forever.

---

Good info!  Does that apply to AU accounts that show on reports as well?

[llecs]

---

tisch0791 wrote:

---

llecs wrote:

OP, per FICO scoring, a closed CC with a balance and a reported CL are fully factored into utilization, not just the balance. It'll remain factored in for as long as the balance reports anything other than $0. Once it is paid off, then FICO will ignore both the balance and CL forever. In other words, that closed TL helps you quite a bit now. However, focus on paying down balances as you can't keep a balance on it forever.

---

Good info!  Does that apply to AU accounts that show on reports as well?

---

Yes.

[VendingKing1]

Oh I have a question to get clarification on the statement "not all cards, such as charge and NPSL, figure into utilization". I have 9000 in available "national chain store furniture" credit, and 5000 in regular visa and mastetcard credit lines. I use the 5000 liberally, from time to time, thinking the furniture available credit keeps my utilization in a good zone. Am I fooling myself?

[my-own-fico]

Could be. Check "Ratio of your revolving balances to your credit limits" under "Understanding Your FICO® Score" in a FICO score report and compare to your own utilization calculations.

[ready13]

Yes your total will lower due to your total credit line amount lowering when you closed the account which you are advised not to do so that you may keep the total availability of the credit card line amount being added to credit lines and raising your score. If you have a balance still left on the card that you closed that is also not going to benefit you because it won't be a positive on credit report and with the extra amount you lowered your total opened lines of credit then you will probably see a drop in your report that maybe larger than expected. If your total revolving credit percentage is high then you will not see it raise any after the drop very much if you do not stop utilizing the card on a regular basis and pay it off so your total uti drops to an even 5% or less adding the other 5% to the other card you mentioned you had. For a total uti of 10% which is ideal for people on this site with intentions to purchase larger things or get a higher line of credit obtain a mortgage at a desirable rate etc. I have been researching and on these sites as all the credit bureaus and have been monitoring all my credit reports and how they fluctuate to be able to get a higher improvement score from month to month and have been at the lower of the 500's less than a year ago I began in February. I am trying to figure out what it is I want to do now since I am able to get better scores I am addicted to continuing to raise it and don't want to stop anymore to take out the loan I can get already because I want the most for the least I am holding out for a better interest rate because it sounds better and cheaper. It was very difficult for me first few months to not spend and not miss the extras but now I am in my mode and I can care less to keep saving so it's what I'll do because I don't want to let up since I'm so close to being at a really good place if I can raise it enough then my score will not drop it will improve with the loan due to the added credit totaling and benefitting me in the bigger picture so I am very very excited good luck