topic True or False: Util question about charge offs in Rebuilding Your Credit

True or False: Util question about charge offs

tbucket101 — Thu, 21 Feb 2013 19:12:20 GMT

Finally getting some credit accounts (2 used car loans, 2 secured credit cards) and according to my TU report, I have 14 "Adverse Accounts" dropping off per their estimate. QUESTION: Regarding Utilization Ratio, If I have a Cap 1 charge off of $950, with an original CL of $500, is that $950 STILL effecting my Util ratio? or is the ratio only factored using ACTIVE accounts/credit lines.

Part 2: If the charge off IS factored in the ratio, once its paid down to zero, even being a charge off, will the original $500 credit limit with a zero balance now POSITIVELY impact my ratio?

Thanks for any information, trying to get myself in a position to buy a home ASAP (FICO hovering around the 550's currently)

Re: True or False: Util question about charge offs

RobertEG — Thu, 21 Feb 2013 19:23:33 GMT

For purposes of other reporting and scoring, the CO is really immaterial. It is simply a side reporting of an accounting measure they took that has its own, separate CR exclusion date.

The entire debt and other aspects of the account are unaffected by the prior CO. If a balance is reporting along with the associated CL, it is still scored, even though charged-off and now closed to further use.

Once paid, both the CL and balance will thereafter be removed from scoring of util.

The bigger issue, in my opinion, is not the util on the account, it is the apparent status as an unpaid, major derog.

That alone, regardless of FICO score, can be a show-stopper in a mortgage app process.

Re: True or False: Util question about charge offs

tbucket101 — Thu, 21 Feb 2013 20:56:03 GMT

Thanks for the clarafication, that now makes sense. ( CL, CO and paying it in full)

In your opinion, ,whats the main differences in a "revolving account" and an "open account" as it pertains to effecting my score?

Just want to concentrate on the things first that have the most impact on score.....mortgage is still sometime down the road (12-24 mnths hopefully)

Thanks again