How do closed revolvers impact the "number of cards reporting" metric?

[BallBounces]

I need a reminder.

How do closed accounts with balances (that are being paid monthly) impact the # or % of cards reporting a balance metric?

Said another way, If trying to eke out just a few extra points, does "all open accounts" and  "AAEO" ignore closed accounts ?

I know the discussions on how they impact overall UTL, but do they impact the other metrics I mentioned above. 

(and yes, this is a bit of an academic excercise)

[Anonymous]

I'll await the response of others, as I'm not 100% sure of the answer to your question.  Just thinking out loud though and looking at the negative reason statement we often see, "number of accounts with a balance is too high" or anything similar, I would expect the algorithm to consider any account with a [non-zero] balance an account with a balance.

[BallBounces]

Thanks BBS.  I will be interested to hear others opinions.

I can test this myself this month, but I have so much "junk" going on with my reports, I won't really be abe to ascertain cause and effect.

[Anonymous]

The number of people that have played and tested out number of accounts with a balance that haven't had a closed account with a balance to test with is no doubt much greater than those in your case, so I'm curious how much data we have out there.

I guess for me the question would be if the closed account with the balance is indeed seen as an account with a balance by the FICO algorithm, so that account also add to the denominator of total accounts considered, or does it only add to the numerator of number of accounts with a balance?

What I mean is if one has (say) 8 open accounts and 3 of them have a [non-zero] balance, but they have 1 closed account with a balance.  In terms of number of accounts with a balance are we looking at 4 of 8 or 4 of 9? 

[Anonymous]

Hi BBS.  FICO (as you know) is much less forthcoming about the details of how its models work than is (say) the LN models used by the insurance industry.  If a FICO model does use ratios in this particular area (and the reason codes don't say whether it does or not) it might easily be done with the denominator as always open accounts with the numerator including all accounts with a balance.  The consequence is that the percent could exceed 100%.  Example:

Three closed cards with a balance.

Three open cards with a balance.

Two open cards with a $0 balance.

That would be (3 + 3) / (3 + 2) = 120%.  (Assuming no loans.)

LN does that with its percentage of accounts that are new:

         New accounts (closed or open)

         -----------------------------

               Open accounts

So yes, it's certainly possible for a scoring model to be done that way, and it has the interesting consequence that the numerator can exceed the denominator.

[jamie123]

IMHO the closed cards with a balance would count as an account with 100% UTI. It is very detrimental to your scores because the UTI is always 100% or maxed out on those cards no matter how much is owed. The 100% UTI probably triggers red flags with your other lenders and everybody is keeping a close eye on your reports.

[Thomas_Thumb]

As I recall @NRB525  peviously presented some data on impact of closed accounts with balances. I provided a link to that thread previously but, it would be hard for me to find again. Perhaps NRB525 recalls the thread and can offer a link to the data.

[Anonymous]

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@Anonymous wrote:

So yes, it's certainly possible for a scoring model to be done that way, and it has the interesting consequence that the numerator can exceed the denominator.

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Yeah, that's more or less what my line of thinking was... that the closed account with a balance would add to the numerator of total number of accounts with a balance but probably not the denominator.  Again, it's probably a bit difficult to find people with closed accounts with a balance around here that are willing to do much testing relative to those that don't have closed accounts with balances.  Cool stuff to think about for sure.

[pinkandgrey]

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@Anonymous wrote:

I'll await the response of others, as I'm not 100% sure of the answer to your question.  Just thinking out loud though and looking at the negative reason statement we often see, "number of accounts with a balance is too high" or anything similar, I would expect the algorithm to consider any account with a [non-zero] balance an account with a balance.

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I was assuming the same thing. Debt is debt. Hopefully someone will chime in with some certainty lol 

[NRB525]

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@Thomas_Thumb wrote:

As I recall @NRB525  peviously presented some data on impact of closed accounts with balances. I provided a link to that thread previously but, it would be hard for me to find again. Perhaps NRB525 recalls the thread and can offer a link to the data.

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The previous discussion was on the effect of closed accounts relative to Utilization. Specifically, whether a closed account is automatically "maxed out" regardless of the relation between the limit the bank still reports and the amount owed by the cardholder. The answer to that one was relatively easy: If the closed account is at a low level of utilization, it does not impact score any worse than an open account at the same utilization. If the closed account has been balance chased to within an inch of it's life, high utilization, then as any Open account with high utilization, it would report / affect score as high utilization.

There are some nuances I saw between how TU reports Total Balances and then changes in Total Available Credit, whether the closed account was included in that or not. For the OP, a relevant question is, how many closed accounts, and how many open accounts, since that will relate directly to what the possible proportion is. Without answering the question specifically how closed cards are counted in that Percent of Cards Reporting a Balance (I don't think I have specific opinion on that, because nearly all my open accounts report balances) if the cardholder has one card closed, and 20 cards open, it seems like not an important consideration. If there are three cards closed, two remaining cards open, it gets a little more relevant.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Utilization-vs-DTI-closed-accounts/m-p/5...