topic Re: Revolving Credit Utilization in General Credit Topics

Revolving Credit Utilization

Anonymous — Mon, 23 Apr 2018 20:05:10 GMT

So I have a question about revolving credit utilization. I currently have 2 open accounts with just $1300 available. Credit Karma and all the vantage based score sites show both of these and show my utilization at 3%, which is right. FICO tho shows I have $3400 and 97% utilization. I can't figure out where they got this number from. The dashboard shows 4 accounts but I see no way of identifying what those accounts are. Even if those are old accounts that are closed, that isn't really revolving credit because it's not available for use. My credit score is almost 100 points different between FICO and Vantage because of this one issue.

Anyone have a suggestion?

Re: Revolving Credit Utilization

Anonymous — Mon, 23 Apr 2018 20:34:26 GMT

Do you by chance have any closed credit cards or revolving accounts with unpaid balances? Closed by lender, charge off, etc?

Re: Revolving Credit Utilization

Anonymous — Mon, 23 Apr 2018 20:53:24 GMT

The problem is likely that you have closed accounts with positive balances. FICO models count those as part of your CC utilization. The front-end "summary" page of Credit Karma includes only open credit cards in its CC utilization section, which misleads people about the serious impact that closed accounts with positive balances can and does have.

Have you printed out the two credit reports that come with Credit Karma? This is not the front-end "summary" page, but the detailed list of all your accounts for that credit bureau, along with the balance and status of each account.

Re: Revolving Credit Utilization

MySunrise271 — Mon, 23 Apr 2018 22:11:48 GMT

What is the effect of closed accounts that are being paid off? In terms of points dropping?

Re: Revolving Credit Utilization

Anonymous — Mon, 23 Apr 2018 22:26:17 GMT

There are two scoring factors involved here: total utilization (all credit limits combined together) and individual utilization (each card and its limit considered by itself).

Before we get to that, a crucial idea is that FICO considers a closed revolving account (typically a credit card) to have a $0 credit limit, no matter what its limit was when it was open.

Total U is calculated by taking your total revolving debt (including closed accounts) and dividing it by your total credit limit. (Remember that closed accounts have a $0 limit from FICO's perspective.)

Individual U is calculated by taking the amount owed on the card and dividing by the card's limit. Any time one's balance is greater than the credit limit, then FICO considers that to have a utilization of > 101%.

Until the closed card is completely paid off, it will therefore always have a utilization of > 101%. Even one card with an ultra-high utilization involves a substantial penalty.

There's a third scoring factor that might be involved, and that is if the account is listed on the report as a "charge-off." If so there is a penalty under the Payment History section of the report.

Re: Revolving Credit Utilization

MySunrise271 — Mon, 23 Apr 2018 22:57:50 GMT

So it would seem that closed account would be prority one to pay off as it is the most damaging relate to the open accounts. Good to know👍🏽

Re: Revolving Credit Utilization

Anonymous — Tue, 24 Apr 2018 02:47:56 GMT

Thank you that is some good info!! In my situation the closed accounts are all over 100% and there are 5 of them. They have been closed for 2-4 years. As they are all charged off and have been sold several times to various collection companies, is there a way to actually pay them off? I can’t pay the original card company. So as far as FICO goes will it see any of these be paid off if I did?
What do you think filing bankruptcy to clear all of these off would do? Presumably that would erase all of the 100+% usage accounts and just leave the 3 open ones.
Thanks again for all the replies!!

Re: Revolving Credit Utilization

Anonymous — Tue, 24 Apr 2018 03:01:25 GMT

I hope you will get some replies from people more experienced with paying off bad debts than I am. I once had a lot of bad CC debt, but that was almost 20 years ago, and I basically just crawled in a hole for 7 years and waited for it to all fall off my reports.