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Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
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How much does Visa Signature really hurt on credit utilization?

My understanding is that Visa Signature cards or AMEX Charge Cards (Green, Gold, Platinum, Centurion etc.) does not necessarily report your credit limit to your CRAs leaving your balance against your other cards' limit so it actually affect your credit utilization ratio. What if I pay off my NPSL (No Pre-set Spending Limit) cards' balance before the statement closes, would that help? Since nothing gets reported, nothing more against my credit utilization ratio?!

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FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742
Frequent Contributor
PayingTheBills
Posts: 353
Registered: ‎01-29-2009
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Re: How much does Visa Signature really hurt on credit utilization?

PIF is always a good idea, but if you want to help your overall util %, why not let a balance report ($2,000 or so), and THEN pay in full before the due date?

 

That way you CL will be your high balance($2,000) and it won't hurt your util% as much if this card or another card reports a small balance.


Starting Score: 540 EQ 517 TU on 11/17/08
Current Score: 668 EQ 715 TU
Goal Score: 760 EQ 760 TU


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Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
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Re: How much does Visa Signature really hurt on credit utilization?


PayingTheBills wrote:

PIF is always a good idea, but if you want to help your overall util %, why not let a balance report ($2,000 or so), and THEN pay in full before the due date?

 

That way you CL will be your high balance($2,000) and it won't hurt your util% as much if this card or another card reports a small balance.


 

"That way you CL will be your high balance($2,000) and it won't hurt your util% as much if this card or another card reports a small balance." ??? I dont quite get what you mean.

 

Also, because of the credit limit not being reported on those NPSL or Charge cards, many people are trying to stand away from it or even downgrade from Visa Signature like I did on my Chase Freedom. If some people do PIF before statement closing date and have adequate/enough credit limit to compensate their credit utilization ratio, it does not really affect much or even nothing, am I right? (Because I'm thinking having a VS or NPSL card should be ok, since I PIF all my cards every month before the statement closing dates.)

 

 

 

-----------------------------------------------------
FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742
Frequent Contributor
PayingTheBills
Posts: 353
Registered: ‎01-29-2009
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Re: How much does Visa Signature really hurt on credit utilization?

If you PIF every month, you're fine as is.

But, your "credit limit" on a card without a preset credit limit is your "highest balance" that has been reported on the card.  So you basically get to choose your limit.  If you let $2, or $200, or $2,000 report (or any other number), that will be the "credit limit" until you let a higher balance report. So, my idea was to allow a balance (of your choosing) to report one month, so you'll have more wiggle room in the future to mitigate any future balances that might report.

Your FICO's would take a hit for that month, but as I understand it, you'd get those points right back next month when you PIF before the next statement date.

However, like you said, if you PIF EVERY MONTH without fail, doing this will not help your FICO's.


Starting Score: 540 EQ 517 TU on 11/17/08
Current Score: 668 EQ 715 TU
Goal Score: 760 EQ 760 TU


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jaybird201
Posts: 672
Registered: ‎07-05-2008
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Re: How much does Visa Signature really hurt on credit utilization?

[ Edited ]

I asked the same question a bit ago and Fused gave me a lovely, concise, lucid answer:

 

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Depending on how a no limit card reports to each CRA, the impact to scores will vary. A no limit card should report the following:

 

EQ: open account, a balance does not factor in revolving util calculations.  

 

EX: revolving, terms 1 month, balance does not factor in revolving util calculations even though it reports as a revolving account.

 

TU: open account, a balance will factor in util calculations if the FICO scoring model TU98 (the one currently in use at this site when we pull TU scores) is used to generate your score. If TU04 is used to pull your score, open accounts do not factor in revolving util calculations.

 

Keep in mind if a balance is reporting, especially a big balance, this might have a negative impact on scores. This is not because of util, it's the mere fact that you owe money. It doesn't seem you lose a ton of points for this, but this is where FICO scoring gets very complicated, so I will leave it at that.

 

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Personally, I have a no limit card and PIF every month after the statement cuts. The only time I'll pay before the statement cuts is if I've got a really large balance that could adversely affect my score, in which case I'll pay down 90% of it.

Message Edited by jaybird201 on 04-06-2009 04:20 PM
Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
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Re: How much does Visa Signature really hurt on credit utilization?

Urgh...I do remember now. It just slipped my mind about the "high balance". Sorry, PayingTheBills! I was just being forgetful.

 

Oh thanks, jaybird201 and Fused. That was a good concise info for my question. It really gets confusing with all the game rules. :smileytongue:

 

 

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FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742

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