Will closing a highly utilized card improve your score?

[Anonymous]

I had good credit and opened a card with a $10,000 limit. Then I hit a couple of rough months and had 5k charged to the card and they lowered my limit to match the 5k, leaving my utilization rate over 90%. They've since closed the card- which I thought was bad news except now that debt is no longer revolving credit so it no longer affects my credit utlization, correct? I only have about $1500 of existing credit availbility and I am using none ofi t, so my new credit utilization is 0% as opposed to 90+% ...

Will this actually serve to improve my credit?

[Anonymous]

If a card still has a balance on it, it affects your UTI.

[Anonymous]

How does that work as I pay it down? Is it considered 100% utilized and will go down from there? I just submitted an $800 payment, will that reflect as a lowered utilization?

Credit Karma shows a 0% Utilization while myFICO shows a 92% utilization...Credit Karma's estimated scores are much lower than the myFICO actual scores.

[Anonymous]

As you pay it down your UTI will go down. Credit Karma doesn't factor closed accounts into it's scores/utilization.

[RonM21]

Right. As long as it is there on your report with a balance, it is factoring into the utilization.

[Anonymous]

Yeah it's too bad that they lowered your limit to your balance and closed the account - that really burned you utilization wise and since you don't have much other available credit there to ease the sting you take it on the chin pretty hard.  All you can do is try to pay down that balance as quick as possible and your scores will rebound to where they were before you charged up that card.

[Anonymous]

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@Anonymous wrote:

I had good credit and opened a card with a $10,000 limit. Then I hit a couple of rough months and had 5k charged to the card and they lowered my limit to match the 5k, leaving my utilization rate over 90%. They've since closed the card- which I thought was bad news except now that debt is no longer revolving credit so it no longer affects my credit utlization, correct? I only have about $1500 of existing credit availbility and I am using none ofi t, so my new credit utilization is 0% as opposed to 90+% ...

Will this actually serve to improve my credit?

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Hi db92,

Did you miss any minimum payments during those rough months?  Also, may I ask what card this was?

Thanks in advance.