topic Re: A closed card no longer counts toward your available cred... in Understanding FICO® Scoring

Utilization factoring?

tisch0791 — Thu, 29 Nov 2012 17:26:32 GMT

I currently have four credit cards in my name. However, one of them is closed. It had a $1,000 limit and I have about $185 left on the balance. I have one open card that is currently over limit (2900 limit, but owe 3200) - ugh had to use it for a $700 a/c repair which threw it over! The other two open cards are close to their limits. I'm wondering, when total utilization is calculated, does the limit on the CLOSED account factor into anything? Or just the balance LEFT on the closed account along with the other balances and their limits?

Thanks for any assistance!

Re: Utilization factoring?

tattooedhusker — Thu, 29 Nov 2012 17:43:24 GMT

I believe only the balance would factor into the utilization, not the limit ($185, not $1000)

@tisch0791 wrote:
I currently have four credit cards in my name. However, one of them is closed. It had a $1,000 limit and I have about $185 left on the balance. I have one open card that is currently over limit (2900 limit, but owe 3200) - ugh had to use it for a $700 a/c repair which threw it over! The other two open cards are close to their limits. I'm wondering, when total utilization is calculated, does the limit on the CLOSED account factor into anything? Or just the balance LEFT on the closed account along with the other balances and their limits?

Thanks for any assistance!

A closed card no longer counts toward your available cred...

djrez4 — Thu, 29 Nov 2012 17:48:21 GMT

A closed card no longer counts toward your available credit, but the balance does factor into your overall debt.

Using the two cards you mentioned, you currently owe $3,385 on an available $2900. That's 116% utilization.

I understand that you have other cards that may factor into your true utilization percentage, but the above is an example.

Re: A closed card no longer counts toward your available cred...

tattooedhusker — Thu, 29 Nov 2012 17:54:15 GMT

Re: A closed card no longer counts toward your available cred...

tisch0791 — Thu, 29 Nov 2012 18:06:33 GMT

So now I'm wondering, if I paid the balance off on the closed card and requested that they re-open it (I'm the one that closed it initially), could that help my credit as it would reduce my utilization percentage? The account has been closed for a long time - would they need to run a hard pull on my credit to see if they would re-open it?

Also, if an AU requests to be removed from a primary's account, does any history on that account disappear from the AU's credit report?

Re: A closed card no longer counts toward your available cred...

djrez4 — Thu, 29 Nov 2012 18:13:45 GMT

If the card has been closed that long, they probably won't reopen it. You'd have to reapply, in which case you'd have new account history. Unless it's Amex, that doesn't help you. You definitely should pay it off, though.

If an AU is removed, I do believe they lose the history. We removed me from one of my wife's cards and it no longer appears on my reports.

Re: A closed card no longer counts toward your available cred...

tisch0791 — Thu, 29 Nov 2012 18:23:40 GMT

Hmmmm maybe that AU removal would work to my advantage - I am an AU on my spouse's account (in addition to the four that are mine as primary). His account is closed (5250 limit but still owe 2450 on the card). So that stinker is on my report too. At least if I get that removed that additional debt won't be factored on me. Hoping that it will make my credit score jump too! Looking to buy a car at the end of the year!

Re: A closed card no longer counts toward your available cred...

StartingOver10 — Thu, 29 Nov 2012 19:47:51 GMT

IMO, it would be wise to remove the AU account from your report and pay off the closed account to a zero balance. Remember the metric measures how many accounts are at zero too.

Naturally, if you could get your utility down your score will take a jump. IME utility is a pretty big factor and you see it all over this board. When I paid off everything down to 4% my score jumped on TU from 705 to 719 this month (myFICO) and my utility before the payoff was right around 12% IIRC (could have been 14%). But my point is, when you get over 50% usage individually and collectively, your score really takes a hit.

Re: A closed card no longer counts toward your available cred...

llecs — Thu, 29 Nov 2012 22:58:25 GMT

OP, per FICO scoring, a closed CC with a balance and a reported CL are fully factored into utilization, not just the balance. It'll remain factored in for as long as the balance reports anything other than $0. Once it is paid off, then FICO will ignore both the balance and CL forever. In other words, that closed TL helps you quite a bit now. However, focus on paying down balances as you can't keep a balance on it forever.

Re: A closed card no longer counts toward your available cred...

vanillabean — Fri, 30 Nov 2012 01:26:23 GMT

I was wondering in which ways a card account can be closed when the balance hasn't yet been fully paid down?

Also, it may be worth considering that not all cards, such as charge and NPSL, figure in utilization.

Re: A closed card no longer counts toward your available cred...

tisch0791 — Fri, 30 Nov 2012 23:08:55 GMT

@Anonymous-own-fico wrote:
I was wondering in which ways a card account can be closed when the balance hasn't yet been fully paid down?

Also, it may be worth considering that not all cards, such as charge and NPSL, figure in utilization.

I have voluntarily closed accounts that have a balance when the bank notified me of an interest rate increase. Since I didn't need to use the cards anymore and didn't agree to the rate increase I just locked the interest rate down by closing it from any future use. And years ago when hubby and I had some financial problems, the bank closed an account for us. However we are still responsible for the balance!

Re: A closed card no longer counts toward your available cred...

tisch0791 — Fri, 30 Nov 2012 23:10:37 GMT

@llecs wrote:
OP, per FICO scoring, a closed CC with a balance and a reported CL are fully factored into utilization, not just the balance. It'll remain factored in for as long as the balance reports anything other than $0. Once it is paid off, then FICO will ignore both the balance and CL forever. In other words, that closed TL helps you quite a bit now. However, focus on paying down balances as you can't keep a balance on it forever.

Good info! Does that apply to AU accounts that show on reports as well?

Re: A closed card no longer counts toward your available cred...

llecs — Sat, 01 Dec 2012 01:28:14 GMT

@tisch0791 wrote:
@llecs wrote:
OP, per FICO scoring, a closed CC with a balance and a reported CL are fully factored into utilization, not just the balance. It'll remain factored in for as long as the balance reports anything other than $0. Once it is paid off, then FICO will ignore both the balance and CL forever. In other words, that closed TL helps you quite a bit now. However, focus on paying down balances as you can't keep a balance on it forever.
Good info! Does that apply to AU accounts that show on reports as well?

Yes.

Re: Utilization factoring?

Anonymous — Sat, 01 Dec 2012 19:12:49 GMT

Oh I have a question to get clarification on the statement "not all cards, such as charge and NPSL, figure into utilization". I have 9000 in available "national chain store furniture" credit, and 5000 in regular visa and mastetcard credit lines. I use the 5000 liberally, from time to time, thinking the furniture available credit keeps my utilization in a good zone. Am I fooling myself?

Re: Utilization factoring?

vanillabean — Sun, 02 Dec 2012 03:41:06 GMT

Could be. Check "Ratio of your revolving balances to your credit limits" under "Understanding Your FICO® Score" in a FICO score report and compare to your own utilization calculations.

Re: Utilization factoring?

Anonymous — Sun, 02 Dec 2012 08:04:49 GMT

Yes your total will lower due to your total credit line amount lowering when you closed the account which you are advised not to do so that you may keep the total availability of the credit card line amount being added to credit lines and raising your score. If you have a balance still left on the card that you closed that is also not going to benefit you because it won't be a positive on credit report and with the extra amount you lowered your total opened lines of credit then you will probably see a drop in your report that maybe larger than expected. If your total revolving credit percentage is high then you will not see it raise any after the drop very much if you do not stop utilizing the card on a regular basis and pay it off so your total uti drops to an even 5% or less adding the other 5% to the other card you mentioned you had. For a total uti of 10% which is ideal for people on this site with intentions to purchase larger things or get a higher line of credit obtain a mortgage at a desirable rate etc. I have been researching and on these sites as all the credit bureaus and have been monitoring all my credit reports and how they fluctuate to be able to get a higher improvement score from month to month and have been at the lower of the 500's less than a year ago I began in February. I am trying to figure out what it is I want to do now since I am able to get better scores I am addicted to continuing to raise it and don't want to stop anymore to take out the loan I can get already because I want the most for the least I am holding out for a better interest rate because it sounds better and cheaper. It was very difficult for me first few months to not spend and not miss the extras but now I am in my mode and I can care less to keep saving so it's what I'll do because I don't want to let up since I'm so close to being at a really good place if I can raise it enough then my score will not drop it will improve with the loan due to the added credit totaling and benefitting me in the bigger picture so I am very very excited good luck

Re: A closed card no longer counts toward your available cred...

w121jld — Thu, 12 Sep 2013 02:43:34 GMT

Does a charge off credit card, credit limit count?

Re: A closed card no longer counts toward your available cred...

llecs — Thu, 12 Sep 2013 16:38:09 GMT

Closed CCs, including a CO'd CC, can still factor into your utilization provided it reports a balance other than $0 and provided it updated on your CR within the past year or so.