American Express

[Anonymous]

Hey All,

I'm new to the FICO management process, so pardon me if I'm sharing something you have learned already.  

I ran my first credit report the other day and noticed that my FICO score was 734. In the report, they said I ranked "very good" on all weightings except for "amount of debt" which they graded as "not good." This was causing my FICO to fall below the 760+ that seems to be the category we are all striving for.

I was curious why I was getting dinged for "too much debt" when I don't have a lot of debt. What I learned was that FICO was dinging me for my American Express card. The problem is twofold. First, American Express doesn't report a "limit" (since technically it is a charge card and not a credit card) so FICO is taking my highest monthly balance, which is $7,500, and recording that as my limit. Second, FICO captures my monthly data on the 4th of every month, so whatever balance I have on my AMEX on the fourth is reported as my monthly debt load. The problem I am running into is I pay my card off in full every month, but usually a little after the 4th. This means that on the 4th I have nearly a full month of charges weighted against my "limit" of $7500. I typically charge 4-7K per month on my card largely because I put my business expenses on the card and my company reimburses me, and just because I like the convenience of the card and tend to pay for everthing on it. This is causing  me to run at 80+% of my "limit". If I simply adjusted the timing of my payments to American Express so I do it before the 4th, my utilization would fall way down and my FICO would be helped.  

The other thing I noticed is that I don't use my Visa much. I have a $12,000 limit on my Visa but prefer to put all my charges on my AMEX. This is causing me to have a zero balance on my Visa every month which I suspect is hurting me in the FICO calculation, but I'm not sure how. 

My lesson from all of this is to pay attention to the timing of my credit card payments and to use my Visa more often so that I have two cards showing low utilization. 

Does anyone have any other suggestions with respect to managing my AMEX. For example, I read somewhere that it helps if you get the CB to classify it as installment credit, but is that true? 

[smallfry]

Does Equifax show your AmEx card as revolving or do they put it in the "other" classification on their online report? 

[Anonymous]

I just checked and the online report classifies the AmEX account type as "open," which the definition box says means it is a charge account that has to be paid in full each month. What's interesting is they have classified my Chase Visa as "open" as well which it is not.  That should definitely be revolving.  

[smallfry]

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@Anonymous wrote:
I just checked and the online report classifies the AmEX account type as "open," which the definition box says means it is a charge account that has to be paid in full each month. What's interesting is they have classified my Chase Visa as "open" as well which it is not.  That should definitely be revolving.  

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I think you are misunderstanding something. An account can be open or closed. Any type of account can be either open or closed. Most credit cards are listed in revolving accounts some charge accounts like an AmEx can find their way into the "other" classification. For example my bogus child support is listed in "other" accounts. 

[Anonymous]

I'm pretty sure I am following you. In the online report that I am looking at and provided by EQ, they distinguish between revolving, installment, open, etc under the "Account Type" line. Some of my past cards that I have closed over the years are classified as "revolving" on that line. I pasted the definitions they provide below: 

Account Type: Type of credit extended

This is the type of credit extended in this credit account.

Revolving:an account, usually a credit card, requiring payments of the balance periodically (usually monthly). Additional credit becomes available again when the balance is paid down.

Installment: a loan requiring regular payments (usually monthly) over an arranged period of time.

Mortgage: an installment loan used to finance purchase of a home or real estate or where your home or real estate is used as collateral.

Open (or charge): an account that must be paid in full every period (usually monthly). 

I'm not seeing any reference to "other" anywhere. I'm only a trial member so maybe I'm getting an abbreviated report.  

[WhirledPeasPlease]

Exactly.

My Delta Amex looks like:

Account Type [?]	Revolving
Account holder [?]	Individual
Scheduled payment amount [?]	$0

Descriptions [?]

• Credit Card

And the Amex Green looks like:

Account Type [?]	Open Account
Account holder [?]	Individual
Scheduled payment amount [?]	$0

Descriptions [?]

• Credit Card

[smallfry]

That's funny. I do not have an AmEx but I have an account listed under other which includes my child support tl. Further description states accounts such as American Express can fall under this heading. 

[notmyname]

I believe EXPERIAN is the only one that uses the "open" terminology. If you look down from that listing it further clarifies with TERMS - monthly.

From your first post , I am curious where you are getting all this info on how Amex is affecting your records. I have never had Fico tell me something so specific as your Amex or Chase is costing you points because of their account types.

I have three Amex charge cards and I have never had anything indicate a problem and my balances are all over the place and I am well above 760 on all three. From people in the know about these matters I have learned that Amex, or any open type account is basically ignored and in fact they help with UTL because you don't have to play the game to keep your score safe if most of your activity is going through those accounts.

So, again, what is the source of the fact that Amex is causing your score to stay under 760?

Thanks,

NMN

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@Anonymous wrote:

I'm pretty sure I am following you. In the online report that I am looking at and provided by EQ, they distinguish between revolving, installment, open, etc under the "Account Type" line. Some of my past cards that I have closed over the years are classified as "revolving" on that line. I pasted the definitions they provide below: 

Account Type: Type of credit extended

This is the type of credit extended in this credit account.

Revolving:an account, usually a credit card, requiring payments of the balance periodically (usually monthly). Additional credit becomes available again when the balance is paid down.

Installment: a loan requiring regular payments (usually monthly) over an arranged period of time.

Mortgage: an installment loan used to finance purchase of a home or real estate or where your home or real estate is used as collateral.

Open (or charge): an account that must be paid in full every period (usually monthly). 

I'm not seeing any reference to "other" anywhere. I'm only a trial member so maybe I'm getting an abbreviated report.  

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[Anonymous]

Well, to be clear, no one from FICO told me that the classification of account types was a factor in my score. I read that online and was curious to hear if anyone else had evidence for that.

In terms of my general assertion that AMEX is costing me points, my reasoning is this: 

On the reports I have gotten back from Transition  and Experian, they have said one of the factors hurting my FICO score is the high level of credit card debt relative to my limit. 

My Chase card consistently has zero to little balance and a 12K limit, so that can't be the problem.  My only other card- the AMEX green card-  consistently has a higher balance. It had $6800 on it at the time of the last filing and doesn't provide a limit to "the big three." I figured this had to be the source of the problem. I did some research online and came across a couple of posts and articles which said Amex presents this problem when it comes to Fico. http://www.smartmoney.com/spending/deals/get-rid-of-your-green-amex-card-17131/?print=1

I called Amex's credit bureau and spoke to the rep. She confirmed that Fico uses the highest monthly balance as my limit and that my utilization rate is high because my monthly charges are high relative to this. She said the reasons that its coming out high even though I pay it off each month is that they submit my balance on the 4th and I'm paying my card off each month right after that so it always looks high.

There is no reason to believe that fixing this will get my score above 760, I admit. However, I would point out that when I ran the simulator on MyFico, the option of paying off my credit card debt was the single greatest factor in making my score jump, which in my case means Amex, and it took my score to a theoretical range of 734-774 with a simple pay down of the debt in one month. The thing is I'm paying this off every month. I'm just doing it the wrong weeks. If I just change the weeks that I pay this off, i should see a bump in my FICO. 

[Anonymous]

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I called Amex's credit bureau and spoke to the rep. She confirmed that Fico uses the highest monthly balance as my limit and that my utilization rate is high because my monthly charges are high relative to this. She said the reasons that its coming out high even though I pay it off each month is that they submit my balance on the 4th and I'm paying my card off each month right after that so it always looks high.

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I see this as more a flaw with Fico then with Amex. Fico is just assuming what your credit line is, if any and making up any number it wants and then penalizing you with false numbers. I don't see how Fico may not be in violation of some credit law by making up false information and reporting it as Amex never stated what the credit line Fico just made one up.