A Secret About Combining Accounts with Capital One

[Anonymous]

     I’ve been gardening for a while since I had to make some large purchases (thus new accounts and inquiries) several months ago. I must admit, it has been boring not being able to fine tune my scores.

     I took the standard FICO scoring hit for new accounts and saw my age score drop as well (including inquiry hits and high balances on new loans). All the stuff we know was not a surprise to me and expected – I was ready. However, I stumbled across something I feel might benefit some on the forum that I cannot explain.

     I have a number of credit cards and always keep my balances low (about 3% card utilization or less) with only one EO (revolving month to month based upon reporting date) card providing that balance or less (much less for total utilization).  I was reading another forum (sorry) when I came across a situation that applied to me. The user had two cards from the same company (MC and VISA) that she wanted to combine. Well to make a long story short, I was in a similar situation. I had an old Cap One MC that I did not use (only every few months to keep it active and not have the limit lowered). I also had a Cap One Quicksilver that I used as one of my 3 EO revolving cards for their 1.5% cash back (only one of those 3 cards ever has a balance based upon statement/reporting dates).

     My QS card had a $25K limit and the old MC card was for only $6.5K. Using the techniques the poster suggested, I did the same. I asked Cap One to close the MC card (aged) and apply the limit to my QS card. Instantly done on line. My QS was now $31.5K and the MC was closed. I was not worried since I knew that the old MC would continue to report for a while and the time difference between the cards age was less than a year (no real AAoA hit here).

     Like an old Arnold Schwarzenegger movie about suppressed Martian colonists – SURPRISE. I made the change late at night and did not check my email for two days. Then I saw an alert and went to MyFICO to see that my scores dropped 4 EQ, 7 TU and 8 EX points across the board. Folks, I’ve been here long enough to know that any score drop (or rise) may be due to other factors; but in my case, since nothing was happening (all the negatives based upon new accounts were already listed). This must have been the issue. What was it?

     Cap One reported the MC account closed immediately (I mean within less than 24 hours – it was not near the reporting date). However, they did not show the new limit on my QS card (that doesn’t report until the 1st of the month so I’ll report on that then). But what really hit me was how in the world could this affect my score?

     I know of the 8.99% total and individual utilization threshold. At that time, I had a balance on my USAA card (one of my other revolving EO cards) of $527 on a limit of $20,000 (about 2.6% card utilization). All other cards (including both Cap One cards) were at $0 utilization. My total utilization was less than 0.6% ($527 out of $92,000 available credit). For the life of me I could not understand this situation.

     Even with the reduction of $6.5K, my total utilization was still under 0.62% - not even 1% while still showing a balance. None of the parameters I have studied here came into play, so how could this be?  On the 1st of the month I expect QS to report my new limit and I’ll debrief then; however, based upon my previous knowledge, I would not expect to see a change. If I do, well then there is something else in the algorithms that we all missed – Be Where!

Y

[K-in-Boston]

Any possible other factors and did you double-check all 3 reports to make sure that only the USAA was reporting a balance?  New inquiries?  Any loans recently paid off?  How many total revolving cards do you have?

[Anonymous]

I would say this has to do with number/percentage of accounts with a balance.  It sounds like your total accounts (and revolvers) with balances remained the same, which is the numerator... but your denomenator (total number of open accounts) dropped by 1 when this recent account was closed.  Dropping the denominator by 1 raises your percentage of accounts with a balance, a common negative reason code provided by FICO for profiles with as few as 2 accounts (1 revolver and 1 installment loan) with balances reported.

One way to attempt to test this theory would be to reduce your number of accounts with reported balances by 1 to see what happens.  That wouldn't be a true test though, as your denominator for this portion of the test would still be 1 less than it was originally, but chances are it would reduce your percentage of accounts with a balance reported back pretty close to where it was prior.

Out of curiosity for the sake of this discussion, how many total open accounts do you currently have and how many of them have non-zero balances reported?

[Anonymous]

Hi K-in-Boston

     Yes, I did pull another 3B. That is how I found out that Cap One MC showed my account closed almost immediately. I have the free monthly pull but I paid the 49 bucks to see the real time data (I get my free pull on the 28th and will compare the data again and report to the forum).

     As for new inquiries – they were already accounted for in my scores several months earlier (none new reported). No loans paid off (only paid down as per schedule - no change over years). The only new loans acquired were also accounted for in my scores earlier. Total revolving cards equaled 6 prior to closing the MC but now 5. No change in the number of cards (until now) for the last 4+ years (albeit CLs have increased over time).  

Y

[Anonymous]

Hey BBS:

     Let me digest your data and I’ll get back with you. As for your question: “Out of curiosity for the sake of this discussion, how many total open accounts do you currently have and how many of them have non-zero balances reported?”

     WOW! You are making me work here. Open accounts with non-zero balances???? I may not comprehend your question for my understanding is that if it is an open account it has a balance. If it has no balance, then I call it a closed account “Paid as Agreed.”

     I have a lot of accounts still reporting that have been paid off. You know those 3-year car loans that we pay off or a furniture loan for the wife. They are all still reporting as “Closed, Paid as Agreed.” So here is what I still have.

Mortgage: Original $379,000 owe ~$62,000

New Car for the bride: Original ~$57,000 owe ~$55,000 (one of the new things)

Co-sign on loan for daughter: Original ~$22,000 she owes ~$5,000

Solar/Battery System for house: Original $82,000 owe $81,000+ (another new thing).

     Of course there are the CCs with only a minimal balance (less than 1% utilization always). That’s it for me with respect to what I pay monthly.

     Having said that; I have 2 paid off car loans in the last year+. A boat loan paid off just under 3 years ago. A new pool loan paid off about 2 years ago. Student loans for my boys (I took a personal loan from USAA) paid off last year.

     So to answer your question I guess I have 4 open accounts with balances (not including CCs) and about 10 reporting installment accounts. Having said that, the new accounts were accounted for (score wise) a couple months ago and this paradigm is driving me crazy.

Y

[Anonymous]

An open account with a balance goes for both installment loans and revolvers.  Installment loans by definition if they're open are going to have a non-zero balance, but that's not the case with revolvers.  What you need to figure out is how many total open accounts have balances.  Say you have 4 installment loans, that's 4 of 4 right there.  Then if you have 10 revolvers and 4 of them have $0 balances but 6 of them have non-zero balances [reported] that would take you to 10 of 14 accounts all together have a balance.  Hopefully that makes sense.