topic Re: Closed Account Scoring - Paydown plan in Understanding FICO® Scoring

Closed Account Scoring - Paydown plan

newmomnewme — Tue, 15 Jan 2019 00:36:52 GMT

Quick question.

NFCU closed (never issued new card) my CashRewards card December 2017...it sat maxed for several months (20k).

As I start an agressive pay down plan, it sits at 18k... I was paying the min $400 (interest is $300).

I assumed that my overall util (74k of 58k used) will be screwed until I pay it off in full.

I will have about 20k to apply to my balances and want to know if PIF the closed NFCU is better for my score than this:

Mercury MC 1.4/1.5 - PIF $1500

Target 2/2.1- PIF $2000

Chase 2.9/3.5 - PIF $2900

Amex Blue 4.3/5 - PIF $4300

Cap1 QS 7.5/7.75 - PIF $7500 (PSECU Visa 2.9% BT deal)

PSECU Visa 15/15 - Pay $8000 becomes 14.5/15 continue min. pymts.

NavCheck 14.5/15 - Pay $1300 becomes 13.3/15 continue min. pymts.

NFCU Visa 18/20 - continue min. pymts.

Pepco Visa 5.5/6 - continue min. pymts.

My goal is to raise score, lower util, and avoid additional AA. Any advice is appreciated!

Re: Closed Account Scoring - Paydown plan

NRB525 — Tue, 15 Jan 2019 01:06:03 GMT

My opinion and experience is that closed accounts do not work any differently for utilization, do not affect score any differently than open accounts.

The more important question relates to the APR of the various accounts, open and closed. Can you add or list the current APR you are paying on these? One approach to paying off large debts is to work on the highest APR first. This reduces future interest costs and helps you in your quest to pay these off.

Re: Closed Account Scoring - Paydown plan

newmomnewme — Tue, 15 Jan 2019 01:18:30 GMT

Thanks for responding, I started an avalanche/snowball paydown plan 1/1/2019. I have $2400 monthly dedicated to the pay down, just wondering what to do with the 20k snowflake coming next month.

Interest rates and other revolving trade lines added below:

25.99% Mercury MC 1.4/1.5 - PIF $1500

24.90% Target 2/2.1- PIF $2000

25.24% Chase 2.9/3.5 - PIF $2900

24.24% Amex Blue 4.3/5 - PIF $4300

26.65% Cap1 QS 7.5/7.75 - PIF $7500 (PSECU Visa 2.9% BT deal)

9.90% PSECU Visa 15/15 - Pay $8000 becomes 14.5/15 continue min. pymts.

15.90% NavCheck 14.5/15 - Pay $1300 becomes 13.3/15 continue min. pymts.

17.65% NFCU Visa 18/20 - continue min. pymts.

15.84% Pepco Visa 5.5/6 - continue min. pymts.

Others

27.25% Macys 0/800 - SD (CLD 2017)

26.90% Victorias Secret 0/900 - SD (CLD 2018)

27.99% Amazon 0/540 - SD (CLD 2018)

Re: Closed Account Scoring - Paydown plan

DIYcredit — Tue, 15 Jan 2019 15:05:31 GMT

You should use the advice given it sounds right.The only difference in closed cc account utilization is that the balance counts,the credit limit is not calculated into overall cc utilization.When you can pay every cc try to keep cc utilization way below 10% especially before an app.The AZEO method is perfect right before an app.Timing is everything.Keep paying every bill on time.keep your oldest cc account open if possible its very important and only open a credit account if you have too.Those are they keys to improving any Fico score.GOOD LUCK...

Re: Closed Account Scoring - Paydown plan

newmomnewme — Tue, 15 Jan 2019 15:14:13 GMT

Thank you @DIYcredit. I am not applying for any cc anytime soon....I would like to purchase a home closer to end of this year and I just want to make sure that I am making the best use of funds for my pay down/score improvement. I will keep posting and keep asking for advice.

Re: Closed Account Scoring - Paydown plan

Anonymous — Tue, 15 Jan 2019 15:45:16 GMT

If it was me, I would pay off that NFCU balance first and then do the rest of your plan. That closed card means it’s got a balance of $18K out of $0 which means no matter how much progress you make on the other cards, you’re always going to be penalized for being maxed out.

If you take care of that balance, you stand a good chance of avoiding potential further AA from creditors as it shows that you have the means to pay down balances. Then you can add that $400 a month to the money left for your other debts and knock them all out.

If you decide not to do that, which I understand because you can pay off many other balances with that money, I’m not so sure that I would recommend doing a BT to the PSECU card... I would pay that card off and sock it away for emergencies. You don’t want them to take AA on such a good card with the trouble that you have with the other cards.

Re: Closed Account Scoring - Paydown plan

NRB525 — Wed, 16 Jan 2019 02:48:33 GMT

No. Closed accounts DO NOT count as maxed out. I have a closed card with about 10% utilization and scores ~840 on all bureaus. That closed card is not “maxed out”.

I will keep banging the drum on this one.

The $20k “limit” on the NFCU card will continue as a utilization comparative, so it will gradually improve score as it gets paid down.

Re: Closed Account Scoring - Paydown plan

newmomnewme — Wed, 16 Jan 2019 03:40:49 GMT

@NRB525 wrote:
No. Closed accounts DO NOT count as maxed out. I have a closed card with about 10% utilization and scores ~840 on all bureaus. That closed card is not “maxed out”.

I will keep banging the drum on this one.

The $20k “limit” on the NFCU card will continue as a utilization comparative, so it will gradually improve score as it gets paid down.

I hope that you are right, I am going to try a combination plan....its getting overwhelming.

Re: Closed Account Scoring - Paydown plan

Anonymous — Wed, 16 Jan 2019 08:27:54 GMT

@newmomnewme wrote:
@NRB525 wrote:
No. Closed accounts DO NOT count as maxed out. I have a closed card with about 10% utilization and scores ~840 on all bureaus. That closed card is not “maxed out”.

I will keep banging the drum on this one.

The $20k “limit” on the NFCU card will continue as a utilization comparative, so it will gradually improve score as it gets paid down.
I hope that you are right, I am going to try a combination plan....its getting overwhelming.

It’s actually correct info. I got mixed up, that’s what I get for posting with no sleep. The account is essentially frozen so that 20K limit is still there. It’s still reporting as a maxed out account because the utilization is 90% but as you pay it down, the utilization will go down. What will happen is when it goes to 0, that 20K will stop being factored into your overall credit limits. Do the highest interest first as you had drawn up.

Re: Closed Account Scoring - Paydown plan

newmomnewme — Wed, 16 Jan 2019 13:42:02 GMT

Thank you all so much. Personally, I wanted to use the big snowflake to see balances zero out vs. piled into the closed black hole.

As I said, I will use a combination approach after the snowflake...each month try to get one of the remaining balances below each threshold....example: right now 18/20= 90% UTIL, so if I pay $400 more this month, it will be 17.6/20= 88% (under the first threshold).

I will keep you all posted. FYI - I am still in the dirty bucket (2 paid collections for 2017), so I am not sure how many points any of this will give me.

Re: Closed Account Scoring - Paydown plan

Anonymous — Wed, 16 Jan 2019 13:48:40 GMT

@newmomnewme wrote:
Thank you all so much. Personally, I wanted to use the big snowflake to see balances zero out vs. piled into the closed black hole.

As I said, I will use a combination approach after the snowflake...each month try to get one of the remaining balances below each threshold....example: right now 18/20= 90% UTIL, so if I pay $400 more this month, it will be 17.6/20= 88% (under the first threshold).

I will keep you all posted. FYI - I am still in the dirty bucket (2 paid collections for 2017), so I am not sure how many points any of this will give me.

Honestly you never know how much these things can affect your score. I certainly never expected to have my TU at 706 with a chapter 7 still on there but its there. Also starting to pay down these debts will make you less likely to experience further AA from your creditors and that alone makes it worth it although at this point I would definitely be preparing myself for the possibility of some balance chasing for awhile.

Re: Closed Account Scoring - Paydown plan

newmomnewme — Wed, 16 Jan 2019 14:23:16 GMT

RIGHT, I am putting on my armor now (upped my investments and savings)....I thought Amazon, Macys, and VS (2nd oldest card opened 2003) would close as soon as I paid in full. Just hoping for the best at this point.

I got the 2nd job to pay off the debts and get in position to purchase a home...I was hoping I would only have to work 2 FT jobs for a year or so, but life happens and I will work them both until my cc debt is 0.

It didnt take long for me to max them out....but it could take up to 2 years to get them paid off.

Re: Closed Account Scoring: Updated 3B 7-9 pt increase on Mortgage scores

newmomnewme — Sun, 03 Feb 2019 14:35:51 GMT

Mortgage scores improved by 7-9 points across ALL three...so my mid score is up from 619 to 629!!

Within 30 days, I paid off 4 of my smallest credit cards, paid 3 more under 88%, and got 1 of 3 collections deleted.
I got my updated 3B Report (2/2) and only 2 of the 4 zero balances and 2 of 3 collections reported.
Hoping that I can get the mid score up to 640+ by 4/2 3B report.

Interest rates and other revolving trade lines below:

24.90% Target 1.3/2.1- plan to PIF 2/15 will report 3/2

25.24% Chase 2.9/3.5 - plan to PIF 2/28 will report 4/2

24.24% Amex Blue 4.3/5 - plan to PIF 2/28 will report 4/2

26.65% Cap1 QS 7.5/7.75 - PIF $7500 (PSECU Visa 2.9% BT deal) 2/28 will report 4/2

9.90% PSECU Visa 15/15 - Pay $8000 becomes 14.5/15 continue min. pymts.

15.90% NavCheck 14.5/15 - Pay $1300 becomes 13.3/15 continue min. pymts.

17.65% NFCU Visa 18/20 - continue min. pymts.

15.84% Pepco Visa 5.5/6 - continue min. pymts.

Others with zero balance as of 2/3

27.25% Macys 0/800 - PIF 1/15

26.90% Victorias Secret 0/900 - PIF 1/8

27.99% Amazon 0/540 - PIF 1/15

25.99% Mercury MC 0/1.5 - PIF 2/1