topic Re: Is a Revolving Credit Card Charged Off Part of Utilzation? in Rebuilding Your Credit

Is a Revolving Credit Card Charged Off Part of Utilzation?

Anonymous — Tue, 02 Feb 2010 15:06:51 GMT

im trying to get my utliazation down.. I have no open credit and i owe 1800 on a cap one card that has been charged off. I just got a $2000 secured credit card from my credit union. Now does the utliazation percentage account for the closed charged off or not?

Other words if i Pay in Full and they mark and paid in full will my score go up cause it was effecting my utliaztion also???

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

Anonymous — Tue, 02 Feb 2010 15:12:31 GMT

Is the amount due being reported by the OC or the CA?

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

Anonymous — Tue, 02 Feb 2010 15:14:51 GMT

Its the Original Creditor CAP ONE

Past Due: $1861 $1861 $1861 High Balance: $853 $1861 $853 Terms:

Limit: $500 Payment: $0 Opened: 09/28/2005 09/2005 09/2005 Reported: 01/10/2010 01/10/2010 01/2010 Responsibility: Individual Individual Individual

This is the Details

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

rosa29617 — Thu, 04 Feb 2010 10:19:40 GMT

I'm not sure what you're asking....but if you're thinking the secured card softens the debt owed for the cap one, then that doesn't sound right. If the cap one account is charged off and you want it removed, there are steps you can take. On the other hand, depending on how old the cap one account is, it could be hurting your score. I think a revolving charge off is simply bad debt. I think when creditors look at a report and see the charge off, that's all the info most of them need to determine as to whether you will get the new loan or not. They may not even care about whether it was maxed out or not: just the fact that the account was mismanaged. On the other hand, some creditors may look at the high utilage of the old debt. I hope this helps.

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

RobertEG — Thu, 04 Feb 2010 11:50:43 GMT

Welcome to the forums, gettingback!

With all due respect, I dont see the heart or logic of your inquiry.

Focus on % util confuses me.

You have a charge off. That is a serious derog that was most likely preceded by monthly derogs on the OC account prior to the CO.

It doesnt matter where the funds may come from to pay it, it remains as a major derog, even if paid. Payment wont erase it.

The OC on the CO has most probabably already closed that account, so you have no CL on that account.

Opening a new, secured card, to pay that debt wont change your overall % util. If you use the new card to pay off the old CO debt, that just adds a new card at close to 100% util, which is an instant killer. It does not address the debt by payment from pocket, only from payment against further accrued debt.

Am I missing something in your plan?

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

bigman023 — Thu, 04 Feb 2010 15:20:51 GMT

I think what the OP wants to know is how the new secured CC, along with the Cap one account, will effect his utilization. From what Ive read on the forum, the balance of your Cap one will effect your utilization. So by opening your new CC, you have lowered your utilization from being way over 100%, down to about 90%, which probably won't do much for your score. If you pay your Cap one off, you will further improve your utilization. But the account will continue to be listed as a CO, and will continue hurting your score.

I'm no FICO guru. But I think you would maximize your score by paying off the CO, while carrying $0 balance on the new CC. I dont think paying off the CO with your new CC will do anything for your utilization. You would just be transfering the balance. Paying the CO with new funds is the best course of action. If it were me and a quick bump in my score wasn't needed, I would maybe consider paying the CO with the new CC if they agreed to a PFD. I would then pay the CC off quick as possible, and would make sure I had no lates on the new CC. Therefore once the balance of the card is paid down, I will have a clean CC account, and low utilization. But, then again, if a quick bump isn't needed, paying the CO down over time would give you the same results as paying down the CC over time, without the CC interest. Paying the CO with the new CC would only make sense if Cap One agrees to a PFD, if you're not looking for a quick bump, and if you don't mind paying the interest on the CC.

Message Edited by bigman023 on 02-04-2010 07:19 AM

Message Edited by bigman023 on 02-04-2010 07:20 AM

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

Leknaat — Thu, 04 Feb 2010 15:59:32 GMT

Yes ..that was what i was aking thank you bigman.( i forgot my pass and had to change my name) I can pay off the old cap one card with new money, i was juast asking since my credit score is a 474 if i pay off the 1800 and then since i opened a 2000 secured credit card would my utlization as you put it go from over 100% to zero since i opened the new card, and even though a paid charge off wont raise my score would the new ultiaztion % change it?

Re: Is a Revolving Credit Card Charged Off Part of Utilzation?

bigman023 — Thu, 04 Feb 2010 19:35:49 GMT

@Leknaat wrote:
Yes ..that was what i was aking thank you bigman.( i forgot my pass and had to change my name) I can pay off the old cap one card with new money, i was juast asking since my credit score is a 474 if i pay off the 1800 and then since i opened a 2000 secured credit card would my utlization as you put it go from over 100% to zero since i opened the new card, and even though a paid charge off wont raise my score would the new ultiaztion % change it?

I dont think anyone can gurantee a score increase for you,especially without knowing what else is in your file. But I think its safe to say that lowering your utilization will have a positive impact on your score. That impact may, or may not, result to an increase in your score. You should remember that the inquiry made to the CRA's when you applied for the CC, the new-ness of the CC account, and your new AAOA could all probably have a negative impact on your score as well. New accounts are said to negatively impact your score for about 6 months.

Good Luck!

Message Edited by bigman023 on 02-04-2010 08:23 AM

Message Edited by bigman023 on 02-04-2010 11:35 AM