Can someone help me understand my charged off credit cards and my utilization?

[lisbonic]

Hello, First thread...

I've lurked for months and finally singed up to get score tracker my Equifax score from here at MyFico.

I saw in another thread people mentioning that PIF or doing settlements on charged off credit cards would actually help your score because of the utilization factor.

Can anyone clarify that for me distinctly?  I logged in and looked at the Fico Simulator and it said that I have $5,500 in open revolving credit based on my report, but I only have 1 $200 secured card actually still 'open', the other 4 cards I had were charged off from non payment 2 years ago (based on financial hardship.).  When I ran the simulator for what my best option would be, it showed my score jumping 120-140 points if I paid off 90-100% of my credit card debt....could that be true??

Does that mean all those charged off cards that went to collection agencies are not only counting against my credit as collecting/charge offs, but on my utilization score too?

[Heavanly1]

Charged off accounts that are still owned by the original creditor will count towards your utilization calculations. Any credit card account listed as charged off but still reporting a balance on your credit report usually means that it's still owned by the OC. Sometimes credit card companies simply assign your account to a collection agency to pursue payment but don't sell it to the CA.

Because utilization accounts for about 35% of your FICO scores, getting it down to under 10% can increase your scores drastically. Most people say that the FICO score simulators are pretty accurate if you shoot for the lower end of the range.

[MarineVietVet]

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@Heavanly1 wrote:

Charged off accounts that are still owned by the original creditor will count towards your utilization calculations. Any credit card account listed as charged off but still reporting a balance on your credit report usually means that it's still owned by the OC. Sometimes credit card companies simply assign your account to a collection agency to pursue payment but don't sell it to the CA.

Because utilization accounts for about 35% of your FICO scores, getting it down to under 10% can increase your scores drastically. Most people say that the FICO score simulators are pretty accurate if you shoot for the lower end of the range.

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That 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.

Plus utilization is actually 30% of your total score.

ETA: The information about utilization can be found in Closing Credit Cards.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[lisbonic]

Thanks so much for the replies....very interesting stuff here!

So Here is an example from the Equifax report I just pulled on myFICO.  This account went to 'collections' in my mind, and I figured the debt was charged off, so it no longer affected my utilization.  Based on what this says, should it?

[MarineVietVet]

It doesn't look like the CL is being reported but I also know that third party sites including myFICO often don't have the most complete information. Have you looked at your free reports from annualcreditreport.com? That should tell you for sure about this.

But I would also let others give their opinions and not just take my answer as etched in stone. 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[lisbonic]

Good advice.

I went and pulled my corresponding Equifax report and that account shows as this:

[MarineVietVet]

According to this your CL is being shown which helps you because it's being used in utilization calculation.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[lisbonic]

OK, now I'm slightly confused.  How is it helping me by showing it?  Isn't it hurting me because the balance is above and beyond the credit limit?

The Simulator here is also a bit confusing, as it says if I just pay it off, my score would only inch up, but if I paid off all my revolving credit debit over 24 months it would be up nearly 200 points.

I have 2 other credit cards that report just like this one does on my Equifax report.  What is the best case to handle these to improve my score the most?  Under this scenario, I am assuming the OC still owns the debit, so I could contact them directly with some sort of PIF or settlement offer, asking for a delete to to put it back in good standing?  Isn't a PIF without a delete on an account like this just a minimal if non existent bump in score? 

Confused after reading the stickied threads on courses of action and now this thread.

[MarineVietVet]

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@lisbonic wrote:

OK, now I'm slightly confused.  How is it helping me by showing it?  Isn't it hurting me because the balance is above and beyond the credit limit?

The Simulator here is also a bit confusing, as it says if I just pay it off, my score would only inch up, but if I paid off all my revolving credit debit over 24 months it would be up nearly 200 points.

I have 2 other credit cards that report just like this one does on my Equifax report.  What is the best case to handle these to improve my score the most?  Under this scenario, I am assuming the OC still owns the debit, so I could contact them directly with some sort of PIF or settlement offer, asking for a delete to to put it back in good standing?  Isn't a PIF without a delete on an account like this just a minimal if non existent bump in score? 

Confused after reading the stickied threads on courses of action and now this thread.

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I apologize that I missed that. I had oral surgery Friday and probably should not have been giving any type of advice. 

Yes you're right that it is showing your utilization above 100% and will continue to do so until you either pay this off which will remove the balance and CL from calculations (if this is done your score should go up because your utilization will be lower but the CO itself will remain) and then GW the creditor or attempt PFD's for all these accounts. If you settle for any amount that will be scored the same as a CO so avoid that if you can.

If none of these have gone to collections then yes you can only work with the OC to try and get all this fixed. If they do go to collections that will be an additional major derogatory added to your report and you don't want that.

Contact the OC as soon as possible and see what they tell you. A PFD looks like the best solution but even a PIF will help your score because it will lower your utilization.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[lisbonic]

Hello all,

Been a while since I posted and wanted to push this thread up to the top because I am still confused.

I am having the same issue trying to understand if my charegd off card is owned by the bank still and affecting my utilization.

I just pulled my equifax report and my equifax score watch and got conflicting info, 

The score watch says I am utilizing 145% of my available credit.  My actual report shows some of those charged off ones with a Credit limit still, but then the synopsis is saying i only have $300 in available credit limits (whihc is acurate).

Help!