topic Re: Are Closed CC Accts with Balances Included in CC Utilization Calc??? in Understanding FICO® Scoring

Are Closed CC Accts with Balances Included in CC Utilization Calc???

Anonymous — Sat, 06 Oct 2007 02:47:57 GMT

Ok guys, sorry for another credit card utilization question. I have studied this board intensely on this topic and still find myself asking questions. I guess every person's situation is different with this stuff. With regard to my situation, I am just now discovering that closed credit card accounts with balances are included in the credit utilization calc. Does this sound right? I guess it makes sense....I mean I still owe on this account even though I no longer have access to the credit limit. Nonetheless, myfico and equifax are giving me a 54% utilization rate and the only way I can figure that % is when I figure in that credit card.

The story behind this credit card is that I went delinquent on it back in april/may so the creditor naturally closed the account. Well, when I finally got the money to start paying on the account, the creditor agreed to a payment plan to pay back the balance. So it shows a balance on my credit report and is reporting like a normal credit card now that I am back to paying current on it, but it is closed.

Now, my follow up question, if I bring down my 54% cc utilization to below 30% this month, how much should I expect my fico score to go up....10, 20 points? And what will happen when I finally pay off this closed credit card? Will the credit limit then be taken out of the denominator of the cc utilization calc?

Sorry for so many questions. I am trying to maximize my fico points so that I can buy a house in the next few months.

Thanks in advance!

Re: Are Closed CC Accts with Balances Included in CC Utilization Calc???

Anonymous — Sat, 06 Oct 2007 03:04:37 GMT

Well. Closed bal are included in UTL. However closed credit lines are not. So it's just the debt. After you pay it off the debt UTL goes away. Just a guess because our CR's react differently but from 54% down to 29% could be about 23-30 points up. Good luck. You could also contact them to see if they will remove the lates or the tradeline after you finish paying back to help your score further.

Re: Are Closed CC Accts with Balances Included in CC Utilization Calc???

Anonymous — Sat, 06 Oct 2007 11:09:44 GMT

Thanks ilovepizza. I hope your right with the points upgrade, especially on the upper end. Since most of my debt used in the credit utilization calc comes from this closed credit card I can't use the fico simulator to see how many points I will get if I pay down so much of my debt (even though it just dinged me 9 points for having high credit utilization at 54%). The only debt that is showing owed in the simulator is the balance I have on the one credit card I have open.....and when I plug in paying off that one in full, the simulator gives me a 0-40 point increase. This is probably because if I were to pay that one credit card off my total debt owed to my total credit available would only fall to 40%.

With that, I have to beg to differ with you on the credit line of my closed account not being included in my utilization calc because if it were not included my debt utilization would be like 120% vs. the 54% its currently showing. I have had to recalc my credit utilization ratio to try to get to the 54% equifax and myfico is showing being used because initially I was not looking at my closed credit card numbers and thought I had a credit utilization of slighly less than 30%. But then with this last turn of the month (sept into oct), as I just mentioned above, my fico score took a hit for 9 points for having too high of a credit utilization at 54%. So, in my effort to recalc my credit utilization, the only way I can get to the 54% is by including both the credit owed and credit line of my closed credit card to both the numerator and denomerator. I do have some installment loan debt, but this wouldn't be included in the calc would it?

Re: Are Closed CC Accts with Balances Included in CC Utilization Calc???

Anonymous — Sat, 06 Oct 2007 15:01:21 GMT

Correct. Your not going to see a score boost from paying down a chunk of installment debt. The power boost comes from paying down revolving debt. With the exception of a HELOC. Not sure how they are calculated.

Re: Are Closed CC Accts with Balances Included in CC Utilization Calc???

fused — Sun, 07 Oct 2007 01:31:37 GMT

Read link in my sig line.