Say your most recent balance on the card was $2,000. That appears to be a very high usage of credit when your substitute limit is just $2,500, not the actual $5,000. Now you appear to have a utilization ratio of 80 percent and your credit score could be depressed significantly -- 20 to 50 points or more -- according to Terry Clemans, executive director of the National Credit Reporting Association.
A 50-point decrease could mean a 1 percentage point difference in your mortgage rate quote, according to Fair Isaac's MyFico.com Web site. On a $216,000 fixed-rate, 30-year mortgage last week, an applicant with a 660 FICO would typically be quoted 7.07 percent, or $1,447 a month in principal and interest. An applicant with a 610 FICO would be quoted 8.05 percent, with a payment of $1,592, or $145 more.
lkenney wrote:The CRA's have a class action lawsuit against them because they allow Capital One to NOT report a credit limit. This can affect a consumers score by as much as 50 points!!!!
Thanks for the link. I understand the issue of CapOne not reporting CLs and the effect on your score.
The Washington Post article (only part of it is available) confirms what I said -- that CapOne is not required to report CLs to the CRAs. Unfortunately the part of the article which explains why the CRAs are doing something illegal is not accessible.
"Capital One is not named as a defendant in the suits. Under the prevailing, voluntary credit system in this country, no federal law requires it, or any other lender, to report any client's data to any bureau. However, federal law does require the credit bureaus to strive to be accurate, and [William A. Harris Sr.]'s suits argue that Equifax, Experian and TransUnion are not in compliance."
masdeocho wrote:CapOne has no legal obligation to report info to CRAs, only to correct wrong info it previously reported. So it has no duty to report CLs to any CRA.