I apologize if this has already been answered, I tried to search the forums but could not find it.
I have a Capital One card that is closed that still has a balance of $800. The credit limit on the card while it was open was $5000. My question is what is the effect of paying off the remaining $800 on the closed account in terms of the late payments aging. Does it look better to have additional on time payments after the most recent late payment on the account? The interest rate on that account is 19.9%, so it is definitely costing me, but I have a Discover card that has a $2900 balance ($7000 limit when it was open) with an 18.3% rate. Would it be better to concentrate on the second card, even though the rate is slightly higher on the first, as this would give me another 6 months or so of on time payments after the last late payment. Does that even matter?
By way of background, in January of 2008 I lost my job. I fell behind on all of my open accounts. Thankfully, I went back to work at the end of 2008 and was able to bring all of my accounts current by January 2009. None of my accounts went to collection, but from the period from March of 2008 to December of 2008 all of my accounts went 30, 60, 90, 120 days past due. All of my credit cards were cancelled. Those late payments and the fact that my lines of credit were cancelled by the credit grantor are the only negatives I have on my credit history. Before that time, I always made my payments on time, and I have not missed any recent payments. My credit score has plummeted. When I was past due on all of the accounts, all of my scores were in the low 500s. Since I brought the accounts current, my FICO Equifax score is 628. I don't remember what my TU and Experian scores are because I use truecredit and they switched to Vantage score, but they are similar. Before this, I had scores just below 800.
I'm trying very hard to get my scores back into the 700s so I can shop for a mortgage next year. I know my score will improve alot when I finish paying down all of my credit card balances this year. Other than the accounts mentioned above, I have an additional $11K of debt on closed accounts. Thankfully, I will be able to pay it all off by July/August of this year. I'm just trying to make sure that I don't pay it off in the wrong way and hurt my score.
I am also writing GW letters to the companies asking them if they can revise the late payment notations, but I haven't had a response yet.
Thank you in advance for your help.
Starting Score: ~500 (12/01/2008)
Really depends on what you want to accomplish.
6 more months of "rated history" would benefit you. While you have the balance, the CL still helps util ($5000 counts till balance is zero).
And the interest rate between the Discover and CapOne is within spittin' distance of each other so you aren't giving up a whole lot.
PLUS you want to keep Discover happiest if they are a currently OPEN account...make payments on time to CapOne try to make above minimums) and make your best pay off efforts to Discover so they "feel the love."
IMO IME 
Txjohn,
Thanks for the reply. Unfortunately, the Discover account is closed as well. All of my accounts were closed when I was out of work and they reached 120 days past due. I am aware of the effect on utilization but it was the effect on rated history that you explained below that I was more concerned with. I'm planning to have all of the cards paid off within the next 6 months, so the CL for all of them will go away by middle of this year, but if I can get some value for the rated history, I will concentrate on the Discover card for now and then pay off the Cap One and Discover card about the same time.
I have since opened a new Capital One card, and I don't use it often. I needed something to float some travel expenses for work when I first started my new job so I opened the new card. Unfortunately, I opted for a card with an annual fee and a lower interest rate rather than a card with a higher interest rate and no annual fee. I wish I had done it the other way around because I could have always asked for reductions in interest rate as my credit improved, but in my experience, they won't convert an annual fee card to a no-annual fee card. Next year, I'll ask them if they will waive the annual fee, but if not, I'll probably cancel this card as well.
According to the FICO score simulator, once I pay off all my outstanding CC debt, my score will jump up to around 680. Another year of no missed payments and it predicts I'll be at 735. Once my credit bounces back, I want to get a CC with no annual payment so I can start building a long history again. And I'm going to keep my fingers crossed that I can get these late notations revised with GW letters.
Of course, if something I said above strikes you as incorrect regarding canceling the CC with the annual fee, please let me know.
Thank you again for your help.
Thank you RobertEG. You are correct, I have 60, 90, and 120 day lates on multiple accounts. I have them on 4 CC accounts and on my mortgage and second mortgage. I am going to keep trying the GW letters. I don't even use the open CC anymore other than to buy gas once a month and PIF. I have a corporate card now that I can use for my work expenses (it doesn't report on my credit). So my CC utilization on my one new card is very low. If the GW letters don't work, I'll just have to give it time, but at least I am working now and I can keep making my payments on time.
What I hate about all of this is that I lost my job, depleted my savings and retirement accounts to keep making my payments as long as I could. I fell behind but I took temp employment to keep things going as well as I could and didn't let one account go into collection. I had offers from all of the CCs to settle the accounts for less than the full amount. I denied the offers in lieu of paying the balances in full. They all raised my rates and charged me loads of late fees, which just compounded the situation making it more difficult for me to keep up. Once I was working the temp job it would have been just enough to make all of the minimum payments, but with the late fees and rates raised to 29%, it wasn't enough anymore. Despite all of this, I made sure to make good on all of my obligations, and now I am viewed as a credit risk. In my opinion, the fact that I pulled through this without defaulting on any of my obligations shows that I'll do whatever it takes despite losing my job to still pay up. But I know they don't see it that way. Oh well, time will heal.
Thanks again.
