Closed Fingerhut account

[Anonymous]

Hi there!

I recently was notified that the Fingerhut account I had, which I never even asked for, was closed for non usage.

I had a 12 point dip in my Credit Karma score this month.  Could the closure have accounted for this?

Thanks!

[Anonymous]

I would look carefully at Karma for four things.

(1)  Did your score go down for both TU and EQ?  (And was the FH account reporting on both?)

(2)  How much did your utilization change as a result?  If, for example, your utilization went from 8% to 11% that might explain part of the change.

(3)  Is the balance on the closed account $0?  If not, that would definitely explain a score drop.

(4) How many open accounts do you now have?  Of these, how many are revolving?  (I.e. credit cards)

Vantage Score (which Karma uses) has its own internal logic that is different from that of FICO 8.  For example, Vantage may like it when a person has a few more open accounts or open credit cards -- losing such an account might have affected you there.  (That's speculation -- Vantage has been studied here far less well than FICO, so nobody knows.)

[accidentalpancake]

^ What he said.

Though I am intrigued by your comment about not ever asking for the account. Did a family member open it on your behalf (been there), or did you get duped by a salesperson? If you truly never opened an account or authorized one, you can get the whole thing removed. I'm guessing that's not the case, though.

[Anonymous]

Actually there was a fifth thing I should have included:

(5)  What percentage of your credit cards were showing a $0 balance before the FH account was closed?  And what percentage are showing a $0 balance now?  Both FICO and Vantage like it when you have open CCs showing a $0 balance.  With this closure, you now have one fewer open card showing a $0 balance, and that could easily account for the drop too.

I like what AccidentalP said just now.  To dovetail on that, the biggest thing that jumps out on me in this whole story is that you have had Credit Karma for a little while and apparently were not looking at your reports.  If you had, you would have seen an account that you never opened on there.

It's just so crucial to emphasize that people need to be reviewing their actual reports to see what's on there and if it is right.  In fact, that's one of the best things about Karma -- the way it enables a person to get dozens of free reports every year for two different CRAs.