Closed Accounts

[ProudMomof5]

I filed a chapter 13 almost two years ago.  I've been rebuilding my credit and now have 3 tradelines.  I made the mistake of getting the Premier card and closed it out.  How does closed accounts look on your credit report?  How does lenders look at that?

[guiness56]

Does it say closed by consumer?

Is there a balance on it?

[Shogun]

If it was closed in a positive status, it will stay on your CR and continue to add to your AAoA for 10 years from when closed.  The CL will not be included in your util however.

[Anonymous]

I'm sorry, but researching this today I have two Mods saying different things about a closed-by-customer cc with a balance....

"Your Chase is at 43%. Closed CCs factor into util just like opened ones. Once the balance goes to $0, then FICO will forever ignore the balance and CL which can increase your util on your other revolving accts if you are carrying balances on them."

^^^ The above was the posted by a Mod @ http://ficoforums.myfico.com/t5/General-Credit-Topics/Simple-FICO-score-boost-needed-here-s-what-I-h...

I'm not hating on anyone, I luv this site & the Mods for working it... but I am confused as to the CC's CL counting into your Utilz.    

To clear this up for everyone, could both you, and the other mods quoted above reply to this post more clearly?

Thanks from all of us....

[Shogun]

There is a difference in the two questions, that's why there's a difference in the 2 mods answers.

Scenario number 1, there is a CO, it is from the OC, there is a balance on this account that will factor into your util.

Scenario number 2.  A closed account, in good standing.  The CL does not factor into the util.  There is no balance because it was closed at $0 balance.

[Anonymous]

Wow that was fast!

So if I closed a credit card (opted out due to higher interest), but it has a balance & 60% utilz, but it is in perfect standing.....   it won't figure into my overall Utilz?  Or it will?   ???  If so, will it count as the balance as 100%limit, or the 60% that is actually is compared to the cards limit when open?

[guiness56]

If you close a CC with a balance, yes, it WILL, factor into your overall utilization.  Once you pay it down to 0, it will no longer factor into your utilization but will remain as an account in  good standing.

[Anonymous]

1.  Can anyone else "2nd" this statement for clearity?

2.  So then it is wiser if the card has a higher limit to pay it down a lot fast, but then take it real slow at the end for continued boosting Utilz?

Thanks!

[guiness56]

Any time a CC is closed with a balance, whether by the consumer, the creditor or a CO, the balance will figure into your utilization.  Any balance owed to an OC counts toward utilization.

Have you ever read this:

Closing Credit Cards

[Anonymous]

read it...

Tidbits (this section is courtesy of moderator, Lel)

- 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.

Thanks