With regards to your main question, I'm not sure how balances on closed revolvers are handled on the mortgage FICO versions. I would guess that the balance on a closed revolver does count towards your aggregate utilization, though I'm unsure about whether it still has a scorable individual util. With regards to agg util, if my guess is correct the score impact should be whatever the % util reduction from decreasing your total revolving balances by $2800 provides. Hopefully someone with more knowledge can give you a more complete answer, both to how it would be handled generally on mortgage versions and any differences among the separate versions used by the three bureaus.
With regards to mortgage scores, you say that you can see the paydown "factored into" EX8 on their site. Is this because you have already paid off the balance, but only EX has updated? Or are you looking at the score simulator? If the latter, score simulators are generally not very accurate and so aren't a good way to judge the potential score impacts of changes to your profile. Also be aware, if you aren't already, that EX8 is not a mortgage score; the Experian version used in a trimerge is EX2.
@credit8502020 wrote:Hi All!
I'm preparing to pay down a closed Discover account.
CL: $10,600
Current Balance: $2800
Does anyone have data points on how this closed account balance being removed impacts mortgage scores and also Equifax and TU? I can see how it is factored into Experian (FICO 8 on their site), but I'm not sure how it may impact the Equifax and Transunion scores. Are there data points that support CRAs weighing aggregate utilization differently?
Thank you!
The elimination of $2800 in revolving debt will improve your aggregate revolving utilization.
But to predict how it would impact your scores is impossible without knowing a lot more about your profile.
As to the relationship between the EX, EQ, & TU mortgage scores, my guess would be that EX FICO 2 will be relatively indifferent to the improvement, while EQ FICO 5 will be the one to react most positively.
@Anonymous wrote:
@credit8502020 wrote:Hi All!
I'm preparing to pay down a closed Discover account.
CL: $10,600
Current Balance: $2800
Does anyone have data points on how this closed account balance being removed impacts mortgage scores and also Equifax and TU? I can see how it is factored into Experian (FICO 8 on their site), but I'm not sure how it may impact the Equifax and Transunion scores. Are there data points that support CRAs weighing aggregate utilization differently?
Thank you!
@credit8502020 Hey how are you doing? Helping another client? I hope you're doing well.
Great advice all above. I agree that EQ5 is the most likely to show an increase. The reason is, it is the most sensitive to number of accounts with a balance as far as the mortgage scores go, I believe, so it could show an increase even if an aggregate utilization threshold or balance threshold is not crossed.
I personally don't I think the fact that the account is closed has much significance, that simply means it's not open to new charges and the credit line outstanding is not available.
as stated above, the balance should still count towards aggregate Revolving Balances and utilization. I don't know whether the credit limits are counted in the denominator or not, but I somehow doubt it. I also don't know whether closed accounts are accounted for by individual revolving utilization.I am considering doing some testing on those fronts at the urging of my friend @SouthJamaica though.
Please don't test it on my behalf @Anonymous I hate to see people close an account with a balance. I do NOT urge you to voluntarily shoot yourself in the foot close an account with a balance.
The only reason it happened to me, and lasted for 7 months or so, was that I had a large balance with a promo 0% APR when my account was closed by the lender. I would never have voluntarily closed it. In view of the large balance at 0% interest, and the fact that I'd paid the bank a $300+ balance transfer fee, I wasn't about to let them deprive me of the benefit of that promo rate.
BTW the one single thread which ran through all 3 of the adverse actions I've experienced in my life was that in each case I was taking advantage of one or more 0% promo balance transfer offers.