How To Calculate Utilization?

[Anonymous]

Im trying to improve my scores and all the models I look at show I have high utilization.  I have one credit card with $1000 CL and a Fingerhut account with a $500 CL that I just opened.  The credit card has a high balance but I will pay it off tomorrow. Are only these open acccounts used to calculate utilization?  I have a few closed credit cards that have been charged off.  I did use the credit karma model (yes i know it's fako) and it only shows i have the $1,500 in available credit and if i reduce imy balances to below 30% my scores will jump.  Doesn't factor in closed charge offs.

[rmduhon]

Charged off credit cards also count towards utilization, both individual and overall. And the individual utilization will be 100% or more on the charged off cards.

[Anonymous]

Credit Check total shows my utilization at 65% and only includes my two open accounts.  Very confusing.

[Anonymous]

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@rmduhon wrote:
Charged off credit cards also count towards utilization, both individual and overall. And the individual utilization will be 100% or more on the charged off cards.

So if I have a chargeoff of $1,700 and a limit of $14,000 it will count that as over 100% utilization?  Very odd.

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[rmduhon]

If it's charged off then the limit isn't there anymore so it'd be 1,700 on a 0 limit. So way over 100%.

[RobertEG]

The fact that a card has been charged-off does not per se affect how its % util is calculated.

It is still the balance divided by the CL times 100.

Many charge-offs have a % util of much lower than 100%.  Stated differently, taking of a CO is based on an account remaining delinquent, not upon it having 100% or more % util.

Creditors will normally continue to report the CL on their account, even after it is closed or charged-off.

If the CL is deleted but a balance remains, FICO will apparently revert to use of the high balance as a pseudo CL in making the calculation.

At least that was an explanation given by Fair Isaac in one of their old webinar presentations several years ago.  I am not sure that remains their policy......