topic Re: Who "decides" to factor a CO card into your utilization? in Rebuilding Your Credit

Who "decides" to factor a CO card into your utilization?

Familywantsahouse — Wed, 09 May 2012 10:14:22 GMT

Is there any way to dispute THAT? I'm pretty much giving up on cap1. It's going to disappear in 6 months and it's the only remaining baddie. My ISSUE is not the CO itself, but the fact it's 6.5 year off and the ridiculously overinflated balance is being factored into the utilization.

This doesn't seem fair or legal to me.

Utilization is meant to gauge how responsibly you manage/use/rely on your OPEN credit. Once it's CO it's no longer ABLE to be used, so how they can posssible factor it into your utilization as if it is?

Re: Who "decides" to factor a CO card into your utilization?

RobertEG — Wed, 09 May 2012 10:26:56 GMT

I must disagree.

Obligation for debt, and thus its inclusion in scoring, does not terminate because the consumer decides not to pay.

It can be removed from util simply by paying it. Util is a measure not only of one's limit on current credit, but also the debt balance incurred by use of those limits.

The "additional debt" would appear legitimate, as the creditor is entitled to interest on use of their money.

I personally dont see the unfairness.

Re: Who "decides" to factor a CO card into your utilization?

Familywantsahouse — Wed, 09 May 2012 10:47:49 GMT

The unfairness is it's not available TO be utilized. If I paid it off and were able to use it again, then fine...but that's not the case. You are already being punished for the debt by the fact that's it's CO and reported as late up until that point...

utilization is meant to gauge how you rely on open credit, no?

Re: Who "decides" to factor a CO card into your utilization?

Anonymous — Wed, 09 May 2012 11:06:43 GMT

You're utilizing 100% of the available credit on that account.

It's probably best to let it age off and stop worrying about "unfairness". We all pretty much know what's gonna happen with a CO. Being at a site like this probably gives us unreasonable expectations about how much repair can be done, new credit can be gotten, etc... Everyone's situation is different so poster A getting approved, denied, successfully disputing, a mortgage, new car, or whatever with a story that feels familiar doesn't mean we'll have the same success.

Re: Who "decides" to factor a CO card into your utilization?

Familywantsahouse — Wed, 09 May 2012 11:47:31 GMT

It's not available though, that's the point...

Re: Who "decides" to factor a CO card into your utilization?

rckstrscott — Wed, 09 May 2012 12:03:29 GMT

@Familywantsahouse wrote:
The unfairness is it's not available TO be utilized. If I paid it off and were able to use it again, then fine...but that's not the case. You are already being punished for the debt by the fact that's it's CO and reported as late up until that point...

utilization is meant to gauge how you rely on open credit, no?

The word utilization is kind of misleading in the terms of credit scoring. In credit scoring terms, the way you need to think of it is like this:

How much money do I owe on my revolving accounts compared to how much money you have available to use on credit. ALL revolving accounts are factored if they have a balance. Pure and simple.

When you charge off an account and you still owe a balance, you owe money, and its a revolving account. There ya go.

I understand your logic in terms of PERSONAL credit utilization (what you have avail vs what you owe) but that isn't how it works for credit scoring.

-scott

Re: Who "decides" to factor a CO card into your utilization?

guydiver — Wed, 09 May 2012 13:37:37 GMT

Devil's advocate for a moment. I too had a Cap1 CO, but I paid in full from the onset of the CO. I fulfilled my obligation, paid the full balance with interest. That CO remained on my report for 6 full years after payment. The unfairness is it's not available TO be utilized. Actually it WAS utilized, as you have already stated you have not paid it. The fact that they don't reset the balance owed to $0 after the charge-off is within their rights as the issuer of the credit. The charge-off is a mere bookkeeping measure on their part, and does not change anything. And knowing Cap1 as I do, you should become familiar with your state's statute of limitations. They can and probably will come after you to get their money back. A friend of mine was in the same boat as you very recently. She woke up one day and found her checking account frozen by a credit card company. YMMV. Good luck.

@rckstrscott wrote:
@Familywantsahouse wrote:
The unfairness is it's not available TO be utilized. If I paid it off and were able to use it again, then fine...but that's not the case. You are already being punished for the debt by the fact that's it's CO and reported as late up until that point...

utilization is meant to gauge how you rely on open credit, no?
The word utilization is kind of misleading in the terms of credit scoring. In credit scoring terms, the way you need to think of it is like this:

How much money do I owe on my revolving accounts compared to how much money you have available to use on credit. ALL revolving accounts are factored if they have a balance. Pure and simple.

When you charge off an account and you still owe a balance, you owe money, and its a revolving account. There ya go.

I understand your logic in terms of PERSONAL credit utilization (what you have avail vs what you owe) but that isn't how it works for credit scoring.

-scott

Re: Who "decides" to factor a CO card into your utilization?

Anonymous — Wed, 09 May 2012 13:45:18 GMT

@Familywantsahouse wrote:
It's not available though, that's the point...

What Robert says makes sense.

It's not available because it's CO'ed, but had it not been CO'ed, it would be available.