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No pre-set spending limit vs.. a limit

Independence
Established Member

No pre-set spending limit vs.. a limit

How does a card with no pre-set spending limit differ from a card with a limit when it comes to your UTIL and fico calculation?

Message 1 of 12
11 REPLIES 11
FretlessMayhem
Senior Contributor

Re: No pre-set spending limit vs.. a limit

FICO compares the credit limit of the card against the balance. Most NPSL cards report the high balance instead of the credit limit, so the high balance is used in place of the credit limit for util calculations.
Here we go again...
Message 2 of 12
maestro
Valued Member

Re: No pre-set spending limit vs.. a limit

For me the BOA Visa Signature does not report a limit, reports a high balance, but the high balance is not counted as part of utility calculations.
Message 3 of 12
Chopbrocoli
Established Contributor

Re: No pre-set spending limit vs.. a limit

If the credit limit is not being reported, FICO will see the high balance as if it were your credit limit. So lets say on a no pre-set limit card, you highest balance is 1000. But each month, if you spend the same amount, then it can be an adverse affect on your score.
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Message 4 of 12
maestro
Valued Member

Re: No pre-set spending limit vs.. a limit

The High Balance is not being counted.   It is not figured in as part of my available credit.

 

 

Message 5 of 12
heirophant
Established Contributor

Re: No pre-set spending limit vs.. a limit

Mods and Admins chime in.  Wasn't that the point of getting an AMEX charge card...not having that count in your utilization calculation?  My score doesn't seem to have been adversely affected even though my highest balance ever has reported on my AMEX Green.  If that were the case, I would have never gotten an AMEX charge card.
FICO's: TU: 717 EX: 702 EQ: 723

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Message 6 of 12
maestro
Valued Member

Re: No pre-set spending limit vs.. a limit

AMEX Charge card should reported as Open or Other type, as opposed to Revolving.

 

If so balances are not included as part of revolving credit.

Message 7 of 12
jaybird201
Established Contributor

Re: No pre-set spending limit vs.. a limit

I, too, would like to know whether Fretless and Broccoli are right or whether Maestro is right.

 

IMHO, I highly doubt that they use high balance in the place of a credit limit as it would adversely affect those who spend the same amount each month...Though I'm no expert on the matter.

 

Mods?

Message 8 of 12
fused
Moderator Emeritus

Re: No pre-set spending limit vs.. a limit

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.

Message 9 of 12
jaybird201
Established Contributor

Re: No pre-set spending limit vs.. a limit


@fused wrote:

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.


 

 

Sweet, thanks Fused.

Message 10 of 12
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