Scoring Closed CC TL with Balance

[Shaman0429]

Good Morning,

Does the FICO scoring model treat CC with balances that have been closed more unfavorably than CC TLs that are active and current? Will paying them off have greater impact on my scores than paying of balances on open TL's?

I have paid off all of my unsecured debt as of Tuesday and I'm just waiting for them to update the bureaus. (is there any way to make that happen any quicker?)

Thanks  again for the assistance.

[Anonymous]

Two key principles here:

(1)  When a card is closed FICO treats its credit limit as zero. 

(2)  When a card's balance is > its credit limit FICO treats it as maxxed out.

Taken together they imply that a closed card with a positive balance will be treated as a completely maxxed out card.  And that is bad for your score.

You mention that you have just paid off all your unsecured debt.  Do you mean revolving debt?  (E.g. credit cards and such?)  If that's what you mean, good for you!  Just be sure moving forward to always have one card reporting with a small positive balance.  FICO imposes a 15-20 point penalty when all cards are at zero.

If, on the other hand, you actually mean unsecured debt, you may wish to realize that FICO does not distinguish between secured debt and unsecured debt.  For example it scores a secured card no differently than an unsecured card, a secured loan no differently from an unsecured loan.

[SouthJamaica]

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@Shaman0429 wrote:

Good Morning,

Does the FICO scoring model treat CC with balances that have been closed more unfavorably than CC TLs that are active and current? Will paying them off have greater impact on my scores than paying of balances on open TL's?

I have paid off all of my unsecured debt as of Tuesday and I'm just waiting for them to update the bureaus. (is there any way to make that happen any quicker?)

Thanks  again for the assistance.

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You should never close an account with a balance. Sometimes it reports as being a maxed out card. You should zero it out before closing it.