closed account util ?

[granny031350]

I have read the threads about closing a credit card account and if there is a balance how it effects utilization and score.  However. . .

I have (had) 2 closed accounts with balances.  My total credit limit is 6550.00 However with these 2 accounts (now closed) it was at 8000.00 

My recent cc balances used up 5404.00 of this 8000.  Now according to the information here, my utilization should have been between 80 and 90 percent.  But all of MYFICO scores said utilization was 69 percent (which is 5404 of 8000 and not of 6550.

So I paid off one of the closed accounts recently.  Net result in score was nothing.  My utilization actually went up according to MYFICO equifax because my total credit available went from 8000 to 7400. 

So was paying off that account in full a dumb idea?  I have been paying down ALL of my balances to lower my utilization and raise my score.  But according to this, I would have been better served by paying off an ACTIVE balance rather than an inactive one.

Has FICO changed their scoring on this issue?

[llecs]

Closed CC accounts still factor into utilization if there is a balance. However, once the balance reaches $0, then that CC no longer is included into utilization.

Paying it in full wasn't a bad idea. The CC issuer could have easily sent the remainder to a collection agency or charged it off.

Message Edited by llecs on 02-22-2009 08:17 AM

[granny031350]

charged off accounts happen when one doesn't pay it.  I have made every payment to this account on time and over the required amount.  So to have charged it off while it was current and up to date and not negative EVER was not possible on their side.  If I hadn't paid or missed payments, well then different story and scenario.

I have 11 open accounts, now 1 closed account.  5 of the open accounts carry balances now.  I have paid off 6 cc in the past 2 weeks.  But I still contend that my score would have gone higher had I taken that 300 and paid off another ACTIVE account to have 4 open accounts with balances out of 11. 

I just believe that MYFICO does not factor in closed accounts to your utilization per my calculations and comments on my credit reports from MYFICO.

Was just wondering if this is true for everyone.

[llecs]

You are right, FICO won't factor in closed PIF accounts into utilization. And this is because there is nothing to utilize. The account is closed and can't be used again (unless the cardholder opts to request it to be reopened). Moreover, closed accounts stop being factored into your mix of credit. Now you are very well covered, but if someone closed their last CC, they'd see a large score drop.

A CCC can CO a closed CC with a balance, even if making payments. It doesn't happen often but I read a few stories in here of posters making good payments and were sent to collections anyway.