Impact of closed card with balance on utilization

[Anonymous]

What is the affect of a closed card with a balance on revolving credit utilization?

I am prioritizing payment of credit card balances of open cards, on the assumption closed cards do not affect my utilization, since the limit is effectively zero.

(I am still making regular, larger than minimum payments on the closed card).

[StartingOver10]

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@Anonymous wrote:

What is the affect of a closed card with a balance on revolving credit utilization?

I am prioritizing payment of credit card balances of open cards, on the assumption closed cards do not affect my utilization, since the limit is effectively zero.

(I am still making regular, larger than minimum payments on the closed card).

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It does affect your utilization because the balance goes against your available credit. It is possible to use up more than 100% of your available credit by having closed accounts with balances. You can imagine the score hit.  It is important to get those paid down asap.

[takeshi74]

Don't overlook the stickies.  This thread is linked in the Helpful Threads sticky in this subforum.

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/m-p/347190?jump=true

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@Anonymous wrote:

I am prioritizing payment of credit card balances of open cards, on the assumption closed cards do not affect my utilization, since the limit is effectively zero.

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I don't recommend assuming that.  If you're going to assume then assume that a closed card with balance will adversely impact your utilization by reporting as maxed since there is no available credit but there is a balance.  It may or may not report that way but it's better IMO to assume the worst and be pleasantly surprised if wrong versus the alternative.

That said, you could review your reports to confirm how the closed account is reporting.

[Anonymous]

Thank you both.  The sticky was helpful, sorry I missed it.  My closed card continues to show the original CL, so there was no need to prioritize the open cards first.

[StartingOver10]

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@Anonymous wrote:

Thank you both.  The sticky was helpful, sorry I missed it.  My closed card continues to show the original CL, so there was no need to prioritize the open cards first.

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^^^That's strange. Usually the CL is zero on a closed account. Are you sure it's closed?

[Anonymous]

All my closed cards show the CL so maybe not that strange. Sapphire updated as closed on EX yesterday and CL still says $5,000

[Anonymous]

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@StartingOver10 wrote:

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@Anonymous wrote:

Thank you both.  The sticky was helpful, sorry I missed it.  My closed card continues to show the original CL, so there was no need to prioritize the open cards first.

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^^^That's strange. Usually the CL is zero on a closed account. Are you sure it's closed?

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Yes, all three reports show the original CL. And unfortunately quite certain the card is closed, it was not renewed. (15 years of perfect payment history, job loss and death of a child caused a number of late payments).

[NRB525]

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@StartingOver10 wrote:

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@Anonymous wrote:

Thank you both.  The sticky was helpful, sorry I missed it.  My closed card continues to show the original CL, so there was no need to prioritize the open cards first.

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^^^That's strange. Usually the CL is zero on a closed account. Are you sure it's closed?

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Not true at all. I've got two currently closed Citi cards, one with $21k limit, the other with over $5k limit, each card is right around $1k remaining balance that I've been paying off for years. All my closed cards, and there have been several, kept the old CL open. The bank won't lend any more money, but they don't usually kick you when you are down with a closed card by CLD all they way to your open balance.

The reason these cards still have balances being paid off, one is on a 1.99% Forever APR, the other a 7.99% APR. Needless to say, the 1.99 Forever was paid minimum payments (particularly after closure) in the interest of paying other higher balances down first.

[MarineVietVet]

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@Anonymous wrote:

What is the affect of a closed card with a balance on revolving credit utilization?

I am prioritizing payment of credit card balances of open cards, on the assumption closed cards do not affect my utilization, since the limit is effectively zero.

(I am still making regular, larger than minimum payments on the closed card).

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Hello and welcome to the forums.

It depends:

- If a closed CC account with a balance continues to report the original credit limit, then both the balance and the CL of the closed account will be used in the utilization calculations.

- If a closed CC account is reporting a zero CL, even if there is a balance on the CC, the card will not be included in the calculations.

- If a closed CC account is reporting a non-zero CL but has a zero balance, the card will not be included in the calculations.

- If a closed account reports a CL that is equal to the balance (balance chasing), then this will be included in the calculations.  This is the worst-case scenario with regard to utilization.

It sounds like in your case it's the first scenario.