Does AZEO work with closed accounts?

[Anonymous]

Hey, guys!

Does AZEO work with closed accounts? Do we enough DPs on this? 

Thanks!

[HeavenOhio]

The revolving portion of your score is based on open cards. That would include overall utilization, individual card utilization, and number/percentage of (open) cards reporting positive balances.

Closed accounts contribute toward general file thickness. And depending on their ages, they can help or hurt one's AoYA (age of youngest account), AoOA (age of oldest account), and AAoA (average age of accounts).

[Anonymous]

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@HeavenOhio wrote:

The revolving portion of your score is based on open cards. That would include overall utilization, individual card utilization, and number/percentage of (open) cards reporting positive balances.

Closed accounts contribute toward general file thickness. And depending on their ages, they can help or hurt one's AoYA (age of youngest account), AoOA (age of oldest account), and AAoA (average age of accounts).

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Thanks for responding, Heaven. That clears things up for me.

[Anonymous]

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@Anonymous wrote:

Does AZEO work with closed accounts? Do we enough DPs on this?

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Can you clarify a bit more what you mean?

You might be asking whether the single account that shows a positive balance can be a closed card.  If so, that would be a very bad idea. 

Closed cards are considered by FICO to have a zero credit limit.  When a card's balance exceeds its credit limit, FICO classifies the card as > 101% utilization.  Thus any closed card with a positive balance is classified as completely maxxed out which hurts your score.

Heaven's reply is as always helpful, but this time was not completely accurate.  FICO does not consider open cards only.  Closed cards with balances also count -- toward total utilization and toward individual utilization.  But since they have zero credit limit they cannot help but only hurt.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Does AZEO work with closed accounts? Do we enough DPs on this?

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Can you clarify a bit more what you mean?

You might be asking whether the single account that shows a positive balance can be a closed card.  If so, that would be a very bad idea. 

Closed cards are considered by FICO to have a zero credit limit.  When a card's balance exceeds its credit limit, FICO classifies the card as > 101% utilization.  Thus any closed card with a positive balance is classified as completely maxxed out which hurts your score.

Heaven's reply is as always helpful, but this time was not completely accurate.  FICO does not consider open cards only.  Closed cards with balances also count -- toward total utilization and toward individual utilization.  But since they have zero credit limit they cannot help but only hurt.

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Sorry about that, CGID.

I have a closed Synchrony account with $671 out $3,000 limit and was hoping if I would use that account for AZEO instead of my secured cards. I plan on paying down to where it will report 1% UTIL. I was kind of hoping not to use my secured cards because I want to just pay off debt instead of creating more. It's a personal challenge.

[SouthJamaica]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

Does AZEO work with closed accounts? Do we enough DPs on this?

---

Can you clarify a bit more what you mean?

You might be asking whether the single account that shows a positive balance can be a closed card.  If so, that would be a very bad idea. 

Closed cards are considered by FICO to have a zero credit limit.  When a card's balance exceeds its credit limit, FICO classifies the card as > 101% utilization.  Thus any closed card with a positive balance is classified as completely maxxed out which hurts your score.

Heaven's reply is as always helpful, but this time was not completely accurate.  FICO does not consider open cards only.  Closed cards with balances also count -- toward total utilization and toward individual utilization.  But since they have zero credit limit they cannot help but only hurt.

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Sorry about that, CGID.

I have a closed Synchrony account with $671 out $3,000 limit and was hoping if I would use that account for AZEO instead of my secured cards. I plan on paying down to where it will report 1% UTIL. I was kind of hoping not to use my secured cards because I want to just pay off debt instead of creating more. It's a personal challenge.

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@Anonymous would be disastrous for your credit, for the reasons eloquently expressed by @Anonymous. Pay that off ASAP. A closed account with a balance is poison.

[Anonymous]

Bear in mind too that to use a credit card for small purchases, and then pay this small statement balance each month, is arguably not creating debt.

It is in that case just a convenient way of buying a tank of gas or some groceries.

Where it would be real debt (like the debt you owe on a car, on a home, etc.) is if you buy stuff and then cannot pay the entire amount in full each month.

If you feel like the presence of cards in your wallet places you at at risk for buying stuff you cannot afford, then a straightforward solution is to hide all cards and set up one of them with a recurring charge of something you know you need or want, like Netflix or a cell phone bill, with autopay enabled on the card.  Use a debit card for all other purchases.

[Anonymous]

PS.  If you think that the issuer of your secured cards offers the option of graduating the card to an unsecured option, then using the card, letting it report a positive balance, and then paying the balance in full may be more likely to tickle that issuer's internal metrics, compared with having many months in a row where you never use it.

Certainly you should always use any new card at least once in the first 60 days, and then use it once every six months after that, just to ensure it is not closed due to inactivity.  With a Wells Fargo card once every 4 months makes more sense, since they have closed cards at month 7 in rare cases.  And if you are hoping to create an internal track record with a particular issuer, then buying something every other month makes more sense.

[Anonymous]

Thanks for the sound suggestions, SJ and CGID! I will impletement them ASAP. I simply never had to consider AZEO.