cancel
Showing results for 
Search instead for 
Did you mean: 

Charged-off and Utilization

800goal800
Frequent Contributor

Charged-off and Utilization

Have a chase card that was charged-off a few years ago and is still reporting monthly.  I'm on a payment plan. 

Is it correct that this will still be figuring in to my overall utilization?  The MyFICO reports, in Understanding Your Score, suggest that the % they show does include this for each bureau. It also lists this as an " Amount Past Due".  On Experian site, it looks like the utilization is not including it. 

Thanks. 

Message 1 of 13
12 REPLIES 12
SouthJamaica
Super Contributor

Re: Charged-off and Utilization


@800goal800 wrote:

Have a chase card that was charged-off a few years ago and is still reporting monthly.  I'm on a payment plan. 

Is it correct that this will still be figuring in to my overall utilization?  The MyFICO reports, in Understanding Your Score, suggest that the % they show does include this for each bureau. It also lists this as an " Amount Past Due".  On Experian site, it looks like the utilization is not including it. 

Thanks. 


The balance still counts in your aggregate utilization. The limit does not.

Message 2 of 13
Birdman7
Super Contributor

Re: Charged-off and Utilization


@800goal800 wrote:

Have a chase card that was charged-off a few years ago and is still reporting monthly.  I'm on a payment plan. 

Is it correct that this will still be figuring in to my overall utilization?  The MyFICO reports, in Understanding Your Score, suggest that the % they show does include this for each bureau. It also lists this as an " Amount Past Due".  On Experian site, it looks like the utilization is not including it. 

Thanks. 


@800goal800 it would be great if you could watch as payments to this account cause you to cross known thresholds and advise if you see any score changes. There have been different theories and it would be great to have data points.

 

some data points indicate sleeping chargeoffs over two years old are no longer factored into revolving utilization. However, since it's regularly reporting, it likely still factors. It would be great to have more data points to support or refute the above. 

there is also a separate Metric that factors amount due on delinquent accounts.

-Our Community’s updated scoring wisdom: Link to Scoring Primer.
-For Negative Reason Codes see: CassieCard’s Score Factors thread.
-ccquest’s workbook to calculate metrics for you: Link to Workbook.

Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.

RIP:

(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 3 of 13
800goal800
Frequent Contributor

Re: Charged-off and Utilization

@SouthJamaica  

How does the amount calculate in the aggregate utilization but the limit on that account doesn't ?

Message 4 of 13
SouthJamaica
Super Contributor

Re: Charged-off and Utilization


@800goal800 wrote:

@SouthJamaica  

How does the amount calculate in the aggregate utilization but the limit on that account doesn't ?


Aggregate utilization = total balances divided by total credit available

 

The balance owed is still part of the total balances; it's money still owed.

 

The limit is not available credit any more.

Message 5 of 13
800goal800
Frequent Contributor

Re: Charged-off and Utilization

@SouthJamaica 


So on a charged off account, I'm adding the balance owed to any balance on open accounts but only use the credit line on the open accounts when using aggregate utilization?

For open accounts I have a balance of $145 and total CL on all 4 cards is $ 3600.
My charged off account has a balance of $8035 with a " closed credit line " of $7500

 

MyFICO says my total balance on open and revolving accounts is $8180 and revolving utilization is 70%. 

Message 6 of 13
SouthJamaica
Super Contributor

Re: Charged-off and Utilization


@800goal800 wrote:

@SouthJamaica 


So on a charged off account, I'm adding the balance owed to any balance on open accounts but only use the credit line on the open accounts when using aggregate utilization?

For open accounts I have a balance of $145 and total CL on all 4 cards is $ 3600.
My charged off account has a balance of $8035 with a " closed credit line " of $7500

 

MyFICO says my total balance on open and revolving accounts is $8180 and revolving utilization is 70%. 


I guess you're in luck, they're still giving you credit for the closed credit line as available credit.  I hope it continues for you. My experience was that when there was a closed account with a balance, they dropped the limit from the closed account but kept the balance.

 

When the MyFICO insiders were asked this very question they responded that the balance is still being counted but said nothing about whether the limit was still being counted:

 

"If an account is marked as closed but still has a balance reported, that balance information may be considered in balance and utilization characteristics within the score."
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/We-re-Tom-Quinn-amp-Tommy-Lee-FICO-Score...
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/We-re-Tom-Quinn-amp-Tommy-Lee-FICO-Score...

Message 7 of 13
Birdman7
Super Contributor

Re: Charged-off and Utilization

A closed account in good standing with a balance is probably not treated the same as a chargeoff.

I’m not sure anyone except fico knows exactly how charge-offs are treated by the algorithm in reference to utilization. Just because the frontend shows that doesn’t necessarily confirm the algorithm is doing the same thing, although it could be.

That’s very interesting data though and I thank you for that and hope you will continue to provide data to help us determine the way it’s being treated by the algorithm.

-Our Community’s updated scoring wisdom: Link to Scoring Primer.
-For Negative Reason Codes see: CassieCard’s Score Factors thread.
-ccquest’s workbook to calculate metrics for you: Link to Workbook.

Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.

RIP:

(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 8 of 13
Birdman7
Super Contributor

Re: Charged-off and Utilization

Like I said, from previous data points it appears Balances are being counted in balances and utilization.

I don’t know about the credit limit though. While it’s true there may not be any further credit available, credit being used on open accounts is still considered in the denominator even though it’s not technically available because it’s already in use.
-Our Community’s updated scoring wisdom: Link to Scoring Primer.
-For Negative Reason Codes see: CassieCard’s Score Factors thread.
-ccquest’s workbook to calculate metrics for you: Link to Workbook.

Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.

RIP:

(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 9 of 13
dustind
Valued Member

Re: Charged-off and Utilization

I find it mildly interesting but logical that they use the current balance of $8035 and not $7500 as the account's limit. I wonder if they always use the higher of the two numbers even for accounts in good standing?

 

8035 + 145 = 8180 balance owed

8180 / (8035 + 3600) = 70.305%

If they had used $7500 + $3600 it would be 73.693% utilization.

 

But that is front end not necessarily back end.

Message 10 of 13
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.