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That article is about charge cards, "which you must pay in full each month" -- not credit cards, which can have balances carry over.
What’s the difference between a charge card and a credit card?:
http://articles.boston.com/2010-01-23/business/29319635_1_card-credit-spending-limits
@simonlarano wrote:So let me understand this right. When we have cards that do not report its credit limit, the highest balance that has been reported on the card is considered as its credit limit? Does that hold true when factoring utilization? I always thought that neither or these things were the case.
The answer to this is kind of complicated. This myFICO blog post might help make things a little clearer:
Is there no limit to the confusion surrounding NPSL [no preset spending limit] cards?
Here's my understanding of how utilization is calculated for these types of cards. ETA: For the TU04 score, the Equifax pathway would be followed (since TU04 is a newer version of FICO like Equifax's Beacon 5.0). For the most widely used Experian score, v2, the TU98 pathway would be followed.
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Thanks Lel! Very helpful. Based on that, it seems that I should charge up the card one month to the credit limit so that I can have the highest possible "highest balance," then pay it off, to help with my future utilization ratio.
@kal9988 wrote:Thanks Lel! Very helpful. Based on that, it seems that I should charge up the card one month to the credit limit so that I can have the highest possible "highest balance," then pay it off, to help with my future utilization ratio.
I'd be more than happy to join you in a shopping excursion in any sunny locale.
LOL I was thinking something expensive that I could return the next week
Or you could BT everything to one card, course that would cost you something. Might be worth it on a one time basis.
Thanks for all the posts and replies regarding this topic, everyone! Why not just make it simple and report all card CL's, regardless of whether it's a Signature card, etc. Is there a benefit for us or the ccc to not report the CL?
I email FICO this question, and their response is in line with my original thoughts:
"Thank you for contacting us. The FICO scoring formula scans the credit report for important data such as account status, balance, and credit limit. If a credit limit is not reported, then the formula can view the largest past balance as the credit limit. With credit cards that do not report or have a credit limit it is a good idea to have the balance on your current statement much lower than the balance on your last statement. Still, credit utilization considers the average amongst all of your revolving accounts. Please let us know if you have additional questions, and thank you for choosing myFICO."
@kal9988 wrote:I email FICO this question, and their response is in line with my original thoughts:
"Thank you for contacting us. The FICO scoring formula scans the credit report for important data such as account status, balance, and credit limit. If a credit limit is not reported, then the formula can view the largest past balance as the credit limit. With credit cards that do not report or have a credit limit it is a good idea to have the balance on your current statement much lower than the balance on your last statement. Still, credit utilization considers the average amongst all of your revolving accounts. Please let us know if you have additional questions, and thank you for choosing myFICO."
Barry's blog post that I referenced above is more detailed and accurate than this response. The response that you received does not make a distinction between the way TU98 and EQ factors in these accounts.
Is your Chase card described as "revolving" or "open"?
Both my Chase cards are NPSL cards and do not report the credit limits. They do report the high balances. Both of them are classified as "open" accounts. For TU98, my past high balances are factored into utilization. For EQ, these cards are completely excluded from utilization. During the holidays, I ran up a pretty high balance on one of my Chase cards. My TU score suffered because utilization went up, but my EQ score didn't budge because it didn't "see" these cards when it calculated my utilization.