topic Re: How is utilization calculated on a card with no limit? in Credit Cards

How is utilization calculated on a card with no limit?

WarthogWrangler — Sun, 28 Oct 2018 19:06:21 GMT

I’m an AU on my wife’s AMEX PRG account. Technically the card doesn’t have a preset spending limit. As a charge card we use it for everything then pay in full every month. I have two other very small CCs of my own for 500 and 300 CL. I pay them off before the statements close and only let 6% report. Her AMEX reports about 3-4K a month to the CRAs. When I look at my scores one of the negative factors is high utilization. It says my available credit is $800 but I’ve used 3-4K due to the AMEX card that doesn’t list a limit on the reports. So how is that supposed to work?

Re: How is utilization calculated on a card with no limit?

Anonymous — Sun, 28 Oct 2018 19:14:31 GMT

Charge cards are not included in UTI calculations for FICO, they used to use the highest balance as credit limit in the calculation but that is no longer the case.

Re: How is utilization calculated on a card with no limit?

iheartwings — Sun, 28 Oct 2018 19:14:37 GMT

That's because the AmEx PRG is a charge card with no preset spending limit. While it contributes to the # of cards with a balance, it does not contribute to utilization calculations for the more recent versions of FICO.

Much older versions of FICO reported balances for charge cards based on the balance relative to the highest balance charged.

Re: How is utilization calculated on a card with no limit?

WarthogWrangler — Sun, 28 Oct 2018 19:20:22 GMT

So right now my EX CR says I’ve used $3,568 of my available credit of $800 which puts me at 100% utilization. That’s $3,525 on the AMEX balance and the rest on the two smaller cards. Seems inaccurate to me then.

Re: How is utilization calculated on a card with no limit?

Anonymous — Sun, 28 Oct 2018 19:21:23 GMT

Authorized User status is only beneficial when you're added to a revolving credit card, not a charge card. And that credit card should ideally have a long history and reporting only small balances (or no balances at all).

Re: How is utilization calculated on a card with no limit?

Anonymous — Sun, 28 Oct 2018 19:25:48 GMT

@WarthogWrangler wrote:
So right now my EX CR says I’ve used $3,568 of my available credit of $800 which puts me at 100% utilization. That’s $3,525 on the AMEX balance and the rest on the two smaller cards. Seems inaccurate to me then.

It might say that on CR or the front end software but it does not factor into UTI at the back end where the FICO score is generated. What is your score? With 100%+ UTI, your score could easily be in 600s with everything else being perfect.

Re: How is utilization calculated on a card with no limit?

Anonymous — Sun, 28 Oct 2018 19:33:40 GMT

@Anonymous wrote:
Authorized User status is only beneficial when you're added to a revolving credit card, not a charge card. And that credit card should ideally have a long history and reporting only small balances (or no balances at all).

Except for Amex who does not backdate, OP's PRG AU not only served no benefit in age and UTI, OP probably took a hit for a brand new account lowing AAoA and resetting AoYA to zero when it was first added.

Re: How is utilization calculated on a card with no limit?

WarthogWrangler — Sun, 28 Oct 2018 20:22:01 GMT

I’ve been an AU on this account since 2009 so it’s reported since then. My scores are upper 500s due to rebuilding after a few charge off 3.5 years ago. Just wondering why they are calculating it this way.