Bank closed CC acct.

[Anonymous]

Due to past credit history, not my current on time payment status.... The bank closed my CC acct.  I am now in a position to pay down/off most of my outstanding debt and would like to know:

Does a closed account with a balance and on time payments generate derogatory reports on my history? I'm trying to figure out who to pay first.

[llecs]

No, there's no derog as is, so as long as you pay on time for at least the minimum they ask for. However, I have read in here of some OCs sending the account to a CA to accelerate the payments. If they report, you'll get dinged.

[Scamp]

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Pete223 wrote:

Due to past credit history, not my current on time payment status.... The bank closed my CC acct.  I am now in a position to pay down/off most of my outstanding debt and would like to know:

Does a closed account with a balance and on time payments generate derogatory reports on my history? I'm trying to figure out who to pay first.

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Closed accounts with balances can kill your scores because although the balance is still calculated in your utilization, the CL you used to have isn't, so your overall debt-to-credit ratio can skyrocket and even go into the negative.  Even if your overall util is okay (perhaps because you have other cards still open and with 0 balances, for example), the individual util on this card is considered 'maxed out', and FICO hits you pretty hard for that.

So when it comes to paying off your outstanding cc debt, take care of any closed-with-balance accounts first.

[jmbfl]

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@Scamp wrote:

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@Anonymous wrote:

Due to past credit history, not my current on time payment status.... The bank closed my CC acct.  I am now in a position to pay down/off most of my outstanding debt and would like to know:

Does a closed account with a balance and on time payments generate derogatory reports on my history? I'm trying to figure out who to pay first.

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Closed accounts with balances can kill your scores because although the balance is still calculated in your utilization, the CL you used to have isn't, so your overall debt-to-credit ratio can skyrocket and even go into the negative.  Even if your overall util is okay (perhaps because you have other cards still open and with 0 balances, for example), the individual util on this card is considered 'maxed out', and FICO hits you pretty hard for that.

So when it comes to paying off your outstanding cc debt, take care of any closed-with-balance accounts first.

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I don't believe this is correct. As long as there is a balance on the closed account both the balance and the CL count in the utilization calculation. Providing the payments are made in a timely fashion there is no drawback to paying a closed account with a balance over time. There is absolutely no reason for the account to be sent to a CA as long it is paid on time. (I have had a closed (by me) account on my CBR's for years.)

[Junejer]

Once that account is closed, the CL gets taken out of the denominator leaving only the balance owed to calculate in the numerator. The CCC may not send to a CA for collection, though I believe some might, if the balance isn't paid off quickly enough to their liking. They can, however, call it a CO if they don't think that it's paid off quickly enough. I would pay that thing off very quickly, if I were in that position, even if it means BT to another active card.

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jmbfl wrote:

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@Scamp wrote:

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@Anonymous wrote:

Due to past credit history, not my current on time payment status.... The bank closed my CC acct.  I am now in a position to pay down/off most of my outstanding debt and would like to know:

Does a closed account with a balance and on time payments generate derogatory reports on my history? I'm trying to figure out who to pay first.

---

Closed accounts with balances can kill your scores because although the balance is still calculated in your utilization, the CL you used to have isn't, so your overall debt-to-credit ratio can skyrocket and even go into the negative.  Even if your overall util is okay (perhaps because you have other cards still open and with 0 balances, for example), the individual util on this card is considered 'maxed out', and FICO hits you pretty hard for that.

So when it comes to paying off your outstanding cc debt, take care of any closed-with-balance accounts first.

---

I don't believe this is correct. As long as there is a balance on the closed account both the balance and the CL count in the utilization calculation. Providing the payments are made in a timely fashion there is no drawback to paying a closed account with a balance over time. There is absolutely no reason for the account to be sent to a CA as long it is paid on time. (I have had a closed (by me) account on my CBR's for years.)

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[score_building]

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@jmbfl wrote:

I don't believe this is correct. As long as there is a balance on the closed account both the balance and the CL count in the utilization calculation. Providing the payments are made in a timely fashion there is no drawback to paying a closed account with a balance over time. There is absolutely no reason for the account to be sent to a CA as long it is paid on time. (I have had a closed (by me) account on my CBR's for years.)

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with a balance?  (doesn't matter really whether it was closed by you or grantor)

[score_building]

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@Junejer wrote:
Once that account is closed, the CL gets taken out of the denominator leaving only the balance owed to calculate in the numerator. The CCC may not send to a CA for collection, though I believe some might, if the balance isn't paid off quickly enough to their liking. They can, however, call it a CO if they don't think that it's paid off quickly enough. I would pay that thing off very quickly, if I were in that position, even if it means BT to another active card.

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even with a higher APR?

[Junejer]

Let's see--higher APR (will take me a little longer to pay off and I would pay a little more in interest) or face a potential CO on my CR for the next 7 years. Which one? I think I will opt for the higher APR, thanks.

Banks are squirrelly these days, you know that. There is no predictability to what they might try to pull. I'd pay it off, like yesterday, come hook or crook.

[score_building]

i've not really heard of a closed account being paid off on time with a modest balance (under 2k) being charged off, not sure what the real benefit of this to the lender would be, but good to know.

[Junejer]

Real talk here. Back in 99, I had an expense card for the bank that I worked at. When I left that job for another position, they said that they wanted the card PIF, before I left. I asked if they were going to cut my expense check before I left and they said no. I told them that, as usual, I will PIF the balance, when I got my expense check.

They harassed me so badly that it became quite ugly. I mean, they would literally call me two to three times per week at my new job, at home and on my cell asking about this balance. Well, a month after I left, I got my expense check. Because I was so upset about the harassment, I decided to pay off the remaining balance in minimum payments. They decided that it wasn't quick enough and decided to sue me. I couldn't make that court date and offered up another court date. They said not a chance, and whamo, I got a default judgment against me. This was bitterness on their part and stupidity and stubbornness on my part. The combination didn't end up well for me.

Anyway, this isn't exactly the same thing, but similar enough--closed account with a balance and always paid on time went very badly for me. I have also read stories about members who have closed CCs paid on time, being CO. CO doesn't mean delinquent, it is just an accounting entry. Some entities have a policy that at the six month point of being closed, they are charging off.