Charge card and credit card scoring impacts One thing you may also be referring to with your comment about the role of previously reported debt, is how past charge card balances were used in the early years of credit scoring to include charge cards along with credit cards in
revolving utilization calculations.
Not exact matches
Converting
revolving debt into an installment obligation alters the
utilization ratio
calculation.
Charge cards are not included in
utilization calculations This leads us to why the authorized user's lack of any
revolving credit matters in this situation.
While there are various vehicles of debt consolidation — credit cards, unsecured personal loans, home equity lines of credit — all you really need to know about the effects of consolidation on credit
utilization, which comprises almost 30 percent of your score, is that
revolving accounts (cards and some home equity lines) are included in these
calculations while installment accounts (loans), for the most part, are not.
Revolving and installment
utilization calculations use the following formulas to measure your credit usage, with lower percentages always being best for your score:
Yet, as you'll see, there are occasions, particularly with credit cards, when this high amount can seriously affect your score via one of the most influential sets of score
calculations —
revolving utilization.
When deciding whether or not to close a credit card it's a good idea to run this
calculation on your own, so you can see how closing the card will impact your
revolving utilization.