06-08-2009 11:51 PM
I am about to apply for my first credit card and have been doing some research regarding what is available out there. My question is about the Schwab credit card offering a 2 percent cash back rebate. I am concerned because I have heard that they do not report your credit limit because it is a visa signature card (even if it is not a visa sagnature card, I wonder if it would report your CL?). If it is the case that your credit limit is not reported, does that mean that a regular credit card, kept at say a 19 percent of max balance would improve your credit score more than this sort of unlimited resolving credit card? Or, is this type of card somehow taken into consideration in the credit scoring algorithm such that it doesn't make much of a difference?
06-09-2009 12:08 AM
06-09-2009 05:01 AM
I asked the same question a bit ago and Fused gave me a lovely, concise, lucid answer:
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.
06-09-2009 09:19 AM
06-09-2009 12:37 PM
...not necessarily. If you have high utilization that's hurting your score, then yes, any new credit card with a limit kept a low level will reduce your utilization (by increasing the denominator in the credit used/credit available utilization equation), and likely help your score. If your utilization is already low, the hard pull might hurt your score more than any lowered utilization helps.
Also, depending on your credit limit with the Schwab Invest First Visa, you may get a Platinum Plus or a Signature. If your credit limit is below $5,000, your card is a Platinum Plus and your limit is reported. If your credit limit is $5,000+, your card is a Signature and your limit isn't report. You can double-check this by looking on the front of your card and it will be labeled as such.
The Invest First Visa is a great card and I'd recommend it to anyone who's looking for a good everyday card. If you're looking for a card to carry not only a 20% balance but ANY balance at all, just get a non-rewards credit union card with a low rate. Rewards cards make zero sense unless you PIF each month...
06-09-2009 01:23 PM
I am trying to get a first credit card and improve my credit score. I have plenty of cash so APR and having a balance is never going to be an issue and I don't care if the APR is 100 percent. I simply want to get a good rewards card as my first credit card, but, I WANT TO REAP THE MAX benefits possible in fico score improvement with a new credit card.
I am leaning in the direction that a REVOLVING credit card might not hurt my score, BUT, it might not help my score in my situation NEARLY as much as a regular credit card with a limit would.
Please let me know if you feel that this is the case. Or, will a revolving credit limit help my credit score in my situation just as much. I don't have much utilization because I have NO OTHER CREDIT CARDS and only a car loan, but, 10 years+ of credit history reported... (not credit cards, nothing bad, just a paid off student loan and some medical collection agency bills that have been paid off years ago).
06-16-2009 01:07 PM