article Is there no limit to the confusion surrounding NPSL cards? in myFICO Blog

Is there no limit to the confusion surrounding NPSL cards?

Barry — Tue, 16 Nov 2010 05:46:01 GMT

My head started hurting the other day as I tried to make sense of what I was reading in the FICO Forums about no preset spending limit (NPSL) cards and the various ways in which their credit limits, highest balances, and account types appear on credit reports - and what these reporting differences can mean for your FICO score.

Re: Is there no limit to the confusion surrounding NPSL cards?

Lel — Wed, 17 Nov 2010 23:36:43 GMT

I think it's worth emphasizing that the exclusion of "open" accounts from utilization applies to the newer versions of FICO. In my case, I have two NPSL accounts (both Chase CCs). On both EQ (a newer version of FICO, Beacon 5.0) and TU (the older TU98 version), these accounts are reported as "open". The past high balances are also reported on both reports. My EQ utilization is 1%, which clearly excludes the current balances and the prior high balances in the calculation. However, my TU utilization is calculated at 4%, which does include the current and past high balances.

So, with holiday shopping season rapidly approaching, I'll be using my Chase cards. My TU score might take a beating, but the EQ score will continue to blissfully ignore the expected increase in credit card use.

Re: Is there no limit to the confusion surrounding NPSL cards?

my-own-fico — Fri, 26 Nov 2010 12:44:21 GMT

Barry, any chance that a myFICO score report would include how it arrives at its overall utilization? As much fun as I have had matching up myFICO's listed percentage for me with my own calculated percentage, a high number of credit card holders don't know what their true utilization is.

My newest card is NPSL. Its account type is revolving and its high balance reports, so I quickly built up a whopping balance and paid it down to less than half before the statement date, thereby creating a comfortable high balance in lieu of the credit limit that's not reported.

I paid down the balance in full before the statement date a month later and am now eagerly awaiting the EQ score fluctuation based on the NPSL account going from 49% to 0%. Unfortunately, I will not know the exact impact, because another card reported earlier than expected, so the NPSL card will take my overall utilization to 0%.

That's not to say all of my cards will be reporting balances of $0. Yet another card actually has a reported balance, but it's NPSL, of the kind that's not used for utilization. But it likely counts as an account with a balance.

Re: Is there no limit to the confusion surrounding NPSL cards?

Barry — Tue, 30 Nov 2010 01:08:43 GMT

Hi my-own-fico...I too can see where having the myFICO report feature a brief explanation of how the FICO scoring formula calculates utilization -- both overall and individual -- could be very helpful for folks new to credit scoring. We'll keep it in mind the next time we revise our myFICO reporting format. Thanks for the suggestion! -Barry

Re: Is there no limit to the confusion surrounding NPSL cards?

TheCreditGuy — Mon, 14 Feb 2011 02:11:12 GMT

I would suggest dumping this type of card. There are too many other options if you are concerned about your FICO score.

Re: Is there no limit to the confusion surrounding NPSL cards?

Uborrow-Upay — Thu, 14 Apr 2011 13:30:13 GMT

Great post, Barry!

The reporting of NPSL cards has confused many of us (me, included) for quite some time. Thanks for taking some of the confusion away.

UBUP

Re: Is there no limit to the confusion surrounding NPSL cards?

adlerman — Sat, 30 Jun 2012 16:49:20 GMT

I have had a Gold American Express card for many years- it has no limit and yet i didn't see it mentioned in any post. If there's no limit how can the % of credit usage be determined by FICO?

Re: Is there no limit to the confusion surrounding NPSL cards?

llecs — Sun, 01 Jul 2012 06:48:25 GMT

adlerman, most all FICO versions out there completely ignore charge cards like your Amex Gold, or a Green, Plat., etc., when it comes to calculating CC util. The only slightly used FICO version that includes these cards into CC util is the same TU FICO version as found here on myFICO. In that version, the balance and "high balance" are used to calculate into your FICO. This version is seldom used by lenders.

Re: Is there no limit to the confusion surrounding NPSL cards?

luckelle — Mon, 09 Jul 2012 07:41:26 GMT

wow. Good to know