There are two scoring factors involved here: total utilization (all credit limits combined together) and individual utilization (each card and its limit considered by itself).
Before we get to that, a crucial idea is that FICO considers a closed revolving account (typically a credit card) to have a $0 credit limit, no matter what its limit was when it was open.
Total U is calculated by taking your total revolving debt (including closed accounts) and dividing it by your total credit limit. (Remember that closed accounts have a $0 limit from FICO's perspective.)
Individual U is calculated by taking the amount owed on the card and dividing by the card's limit. Any time one's balance is greater than the credit limit, then FICO considers that to have a utilization of > 101%.
Until the closed card is completely paid off, it will therefore always have a utilization of > 101%. Even one card with an ultra-high utilization involves a substantial penalty.
There's a third scoring factor that might be involved, and that is if the account is listed on the report as a "charge-off." If so there is a penalty under the Payment History section of the report.
