topic Re: Payoff or Not? in Credit Cards

Payoff or Not?

Anonymous — Sun, 13 May 2012 13:03:31 GMT

I have a BofA CC that was opened in 1999. It's reporting a CL of $11.7k and has a balance of $300, but has been closed at my request for a few years. If I pay the balance in full, will this negatively affect my AaoA (AaoA is about 9 years, oldest account opened 20-years ago)? Is the account better for my CR not PIF. I can stretch this out for about another year by paying the $10 min required, but I just want to zero balance this account out. I am thinking that the CL is being factored in and is helping my utilizatiuon (or does closed CC used into factoring utilization?).

What's best to do?

Re: Payoff or Not?

Anonymous — Sun, 13 May 2012 16:36:00 GMT

@Anonymous wrote:
I have a BofA CC that was opened in 1999. It's reporting a CL of $11.7k and has a balance of $300, but has been closed at my request for a few years. If I pay the balance in full, will this negatively affect my AaoA (AaoA is about 9 years, oldest account opened 20-years ago)? Is the account better for my CR not PIF. I can stretch this out for about another year by paying the $10 min required, but I just want to zero balance this account out. I am thinking that the CL is being factored in and is helping my utilizatiuon (or does closed CC used into factoring utilization?).

What's best to do?

It won't affect your AAoA at all. 10 years from closing it will disappear and then it will affect your AAoA.

I believe it is factored into your utilization, until it is paid off.

I would pay it off rather than pay interest on it.

Re: Payoff or Not?

Anonymous — Sun, 13 May 2012 17:18:27 GMT

The only way to see is to check your credit report to see what it is reporting. LIkely, the closed CL is not adding to your available credit. However the balance is adding to your total revolving debt so you are getting a double whammy in regards to utilization.

Re: Payoff or Not?

TNTransplant — Sun, 13 May 2012 19:21:59 GMT

@Anonymous wrote:
I have a BofA CC that was opened in 1999. It's reporting a CL of $11.7k and has a balance of $300, but has been closed at my request for a few years. If I pay the balance in full, will this negatively affect my AaoA (AaoA is about 9 years, oldest account opened 20-years ago)? Is the account better for my CR not PIF. I can stretch this out for about another year by paying the $10 min required, but I just want to zero balance this account out. I am thinking that the CL is being factored in and is helping my utilizatiuon (or does closed CC used into factoring utilization?).

What's best to do?

Even if you pay it off, the card should positively add to your AAoA for another 10 years.

This is correct. If a closed CC account with a balance continues to report the original credit limit, then both the balance and the CL of the closed account will be used in the utilization calculations. So, right now this card is factored into your current utilization. Once you pay it off completely, it will not.

So, to actually answer your question... I would go ahead and pay it off, unless it would drastically change your utilization. If that was the case, I'd pay down my open/active cards first, then pay off the closed card last to take advantage of the utilization cushion that you currently enjoy from this card.

Re: Payoff or Not?

Anonymous — Mon, 14 May 2012 06:22:02 GMT

I would pay it off as well no need to beat a dead horse here with the details.

Re: Payoff or Not?

improvingmycredit — Mon, 14 May 2012 09:00:33 GMT

Word of advice... never pay interest a debt just to affect your FICO. We work on improving our FICO scores so that we get better rates and actually pay less for borrowing. If you have a closed account... always pay it off if you can. It is in most cases actually a deficit to your score. You may see a bump in your score if the TL isn't reporting a CL. (pretty sure I'm right on this but someone else chime in if I'm incorrect on this)

Re: Payoff or Not?

Anonymous — Mon, 14 May 2012 14:38:15 GMT

Thanks everyone. I will PIF and wil see how it wil affect my score.