Why is VantageScore, Credit Karma are so useless

[sghosh5]

I have been paying off my huge debt (98%) to 46% currently now, in this process i closed a card which had a small 1K limit. So even after closing it the utlization is 46%. Today i got an alert from CK that your score dropped 40 points !!! And change is credit report is your utlization dropped and closed account. WTH

[gdale6]

CK (Vantage Score) doesnt take into consideration closed accounts for its AAoA

[Anonymous]

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@gdale6CK (Vantage Score) doesnt take into consideration closed accounts for its AAoA

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VS 3.0 does take into account closed accounts when considering AAoA, it's just that the fluff software that CK uses only takes into account open accounts.  This is of course very misleading.

It sounds to me like the OP closed an account that had a balance still on it, even though he paid down the utilization on it considerably.  That being said, a closed account with a balance is scored as a maxed out 100% utilization account.  No doubt that is going to do damage to a score, regardless of scoring model.

[sghosh5]

No it was my paid off good standing chase southwest credit card that i closed. Chase or any bank will not let you close an active account without paying the balance in full. I closed the account because the card was useless for me and don’t want to pay yearly fees

[Anonymous]

Closing any open credit card will increase your utilization % (sometimes only a small amount, sometimes by a lot)  That's because the credit limit on your closed card is no longer considered as part of your total credit limit.

An increase in utilization can sometimes hurt your score.  This is true whether the scoring model is VantageScore or a model made by FICO.

Closing a credit card can hurt your score in other ways.  If a person only had a small number of cards to begin with, the closure could well limit your ability to show many open accounts with a $0 balance, a factor different from utilization and which most scoring models consider.

Karma is a good tool for someone like you.  Not because of its scores, which are not used by many lenders, but because of its frequently updated reports.  The important thing is to pay off all your CC debt.  All scoring models will like that, and Karma can help you monitor how your CC balances are reading at TU and EQ.

PS.  You write "Chase or any bank will not let you close an active account without paying the balance in full."  That's not our experience here on the forums.  Account closure with a positive balance can definitely happen -- but the CC issuer will still expect you to pay it.  Their decision to permit you to keep it open is different from their expectation that you will pay it.  See this language at creditcards.com:

"If don't want to use a credit card anymore, you can close the account and then concentrate on paying off the balance."

https://www.creditcards.com/credit-card-news/credit-card-tips-on-closing-accounts-1267.php

[sghosh5]

Ok. My Fico actually did not get any effect from account closure. Its just absurd to see my utilization going down and closing a 1K Card will cause a 40 point drop in CK. Anyway, i will just ignore CK for sometime until i bring my utlization less than 30%.

[Anonymous]

What tool(s) are you using to access your FICO scores?

Again, good decision not to pay a lot of attention to your Vantage scores.  Monitoring your reports can make a lot of sense, however, and Karma is great for that.

[sghosh5]

I am using myFICO to monitor fico scores. Thanks for all the input

[marty56]

The one case they are not useless is when a credit monitoring service allows daily pulls that provides them so you can see if there was a change in the content of your CR so then you could pull your FICO score.  The scores themselves are useless.

[Anonymous]

While I don't rely on VS scores for making credit decisions since they're not used by lenders, I do find them useful for giving a rough idea of where my standing is at any given time; my VS scores aren't too far off from my FICO scores. Stipulating that you shouldn't use VS/CK scores as data points in making credit card and other loan decisions, the monitoring is helpful to me with things such as tracking utilization, new accounts, CLI's and the like.