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Recent Questions on myFICO Forums: Missing Payments, Revolving Utilization and More

, by Tom Quinn

In this blog series, our credit scoring expert, Tom Quinn, answers common credit score and credit-related questions that you have. Post your questions on our Understanding FICO Scoring and General Credit Topics threads on the myFICO® Forums.

Does missing a payment where the current amount owed is small have the same impact on a FICO® Score as missing a payment on an account with a large balance?

When assessing missed payment information, FICO® Scores may consider the balance and/or amount past due reported on delinquent accounts. However, analysis of credit bureau data generally shows that factors such as recency, severity and frequency of delinquency information are more highly predictive.  The more recent, severe and frequent the missed payment information the bigger the impact on a FICO Score.

As such, be sure to check your statements to see that you have paid all required amounts owed on time.

Do FICO® Scores consider historical revolving utilization in the calculation?

Several myFICO Forum members were discussing how their credit card balances (and revolving utilization) can vary quite a bit from month to month and wanted to understand if FICO® Scores take into consideration historical credit card balance and utilization information.

For example, will the following scenarios be scored differently given their different revolving utilization trends over time?

  1. John is currently 50% utilized on his revolving trade lines but was 25% utilized last month and 15% the month before.

  2. Susan is also currently 50% utilized on her revolving trade lines but was 63% utilized last month and 74% the month before.

FICO® Scores focus on the current balance and utilization information being reported at the time the credit report and FICO® Score is requested.  Historical balance and utilization information is not factored into a FICO® Score.

Will closing an account lower my average time on file value and negatively impact my score?

A forum member writes she has a secured credit card she opened about 10 years ago when she was first trying to establish a credit history.  It worked as she now has several credit cards and doesn't need this "starter" credit card anymore. She is thinking of closing the card down.  However, she has concerns that taking this action could negatively impact her FICO® Scores.

It's important to understand that closing an account will not automatically exclude the account information from being considered in the score calculation.

  • A reported closed trade is still eligible to be included in "length of credit history" type characteristics until it is no longer reported (generally about 7-10 years after the close date).

  • Existing balance and historical missed payment information that has been reported on the account will still be considered in the score calculation even when the account has been closed.

  • Closing a revolving account could have a negative impact on revolving utilization (percent of revolving balances/revolving credit limits) as the credit limit on the closed account will no longer be considered in the calculation.

A general rule, closing down accounts won't increase your FICO® Scores.

Want your questions answered? Join the myFICO® Forums to discuss personal finance topics with your peers.

Tom Quinn

Tom Quinn is the Vice President of Business Development for myFICO and has over 25 years of experience working with consumers, regulators, and lenders regarding credit related questions and initiatives.