topic CREDIT UTILIZATION in Understanding FICO® Scoring

CREDIT UTILIZATION

Anonymous — Mon, 26 Oct 2020 23:58:24 GMT

IF I HAVE A CLOSED ACCOUNT WILL THIS BALANCE EFFECT MY UTILIZATION ON MYFICO?

Re: CREDIT UTILIZATION

Remedios — Tue, 27 Oct 2020 00:09:28 GMT

All revolving accounts with balances affect utilization.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 00:13:01 GMT

Even if they are closed? The reason I ask is because my utilization on Credit Karma is 21% but myfico utilization is 55%.

Re: CREDIT UTILIZATION

Remedios — Tue, 27 Oct 2020 01:49:00 GMT

Credit Karma is good for monitoring changes to your credit report and nothing else.

Numbers you're seeing on CK are wrong.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 02:25:23 GMT

@Anonymous wrote:
Even if they are closed? The reason I ask is because my utilization on Credit Karma is 21% but myfico utilization is 55%.

Credit Karma's VS3 score doesn't include closed accounts in aging calculations, and it looks like it doesn't include them for utilization either.

Remedios already provided the correct answer, but in case anyone doubts that, here's confirmation from a Vice President of Scores at FICO:

Question (from K-in-Boston):

a.) Can you clarify whether closed revolving credit accounts reporting both a balance and a credit limit are indeed essentially treated the same as open revolving accounts until they reach a $0 balance for the purposes of both individual account and aggregate revolving utilization, particularly for FICO 8?

Answer (from Tom Quinn, VP Scores, FICO):

"If an account is marked as closed but still has a balance reported, that balance information may be considered in balance and utilization characteristics within the score.

For older score versions, HELOC accounts may be considered in the score including in several balance and utilization related characteristics. For newer score versions, HELOC accounts may not factor into balance and utilization." ( Link )

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 02:57:41 GMT

Actually the numbers on Credit Karma are not incorrect, my vantage scores match the bureaus so that is not true but thanks.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 02:58:26 GMT

Thanks for this

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 03:25:33 GMT

@Anonymous Welcome.

Indeed the numbers for utilization and aging that you are seeing on Credit Karma are incorrect.

The score is correct for vantagescore 3, but that does not mean the utilization and aging they display on their interface is correct much less calculated the way vantage or fico calculates them.

If I remember correctly I think vantagescore does calculate closed accounts, but I think the credit karma interface doesn’t show it. let me page someone who will remember for sure. @Anonymous

Also noteworthy Tom Quinn said the balance would be considered; he didn’t say anything about the credit limit and he did not say they were treated the same as open accounts, but I believe they are treated the same.

Re: CREDIT UTILIZATION

Remedios — Tue, 27 Oct 2020 03:24:39 GMT

@Anonymous wrote:
Actually the numbers on Credit Karma are not incorrect, my vantage scores match the bureaus so that is not true but thanks.

Okies.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 04:25:06 GMT

Okies.

Dokies!

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 14:14:47 GMT

@Anonymous wrote:
Credit Karma's VS3 score doesn't include closed accounts in aging calculations

This is a common misconception due to CKs summary front end, which you are correct doesn't include closed accounts for the averages they display. Closed accounts are however included in VS3 age of accounts (just like Fico scoring models) even though CK would suggest otherwise.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 14:30:01 GMT

@Anonymous wrote:
@Anonymous wrote:
Credit Karma's VS3 score doesn't include closed accounts in aging calculations
This is a common misconception due to CKs summary front end, which you are correct doesn't include closed accounts for the averages they display. Closed accounts are however included in VS3 age of accounts (just like Fico scoring models) even though CK would suggest otherwise.

I remember that coming up once. Wallethub does the same thing as CK with my accounts - it doesn't include my closed SSL that aged to 1yr 0mo before I closed it.

There is some ambiguity from VantageScore itself on when it will drop closed accounts:

"FICO and VantageScore differ on how they factor for a closed credit-card account. FICO ignores the closed account status and continues averaging its age with your active accounts. Depending on the type of account and your credit profile, VantageScore may drop the closed account, shortening your overall age of credit."

( https://www.vantagescore.com/news-story/329/9-myths-about-credit-scores )

Did anyone ever find out which account types they are talking about here?

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 15:35:44 GMT

Very interesting.

Re: CREDIT UTILIZATION

SouthJamaica — Tue, 27 Oct 2020 17:18:40 GMT

@Anonymous wrote:
IF I HAVE A CLOSED ACCOUNT WILL THIS BALANCE EFFECT MY UTILIZATION ON MYFICO?

Yes it will.

Re: CREDIT UTILIZATION

Anonymous — Tue, 27 Oct 2020 18:30:06 GMT

VS needs to get it together, as they have opposing information in those "myths" articles on their own site.