Equifax reports credit utilization as 322% (incorrectly). Help?

[Anonymous]

I have 2 visa signature cards and a chase card. The visa signature cards have limits of 13800 and 9500 respectively, the chase card has a limit of 4000. I got my free annual credit report from equifax and, as many have noticed, there is no credit limit reported for the visa signature cards. The high balances do show up on the account information for each of the two accounts. However, my credit score (I purchased it from equifax along with the report) is substantially lower than it used to be (680 versus 740 - 760 last august), with the reason given being that my credit utilization is too high. In the summary table, my revolving credit utilization is given as 322% (!!!!) : 3 revolving accounts with 12k in current balance and -8k (yes negative 8000!) in available credit. I first called my credit card (FIA), who told me that it was "impossible" to report the credit limit and that the credit reporting agency should be using my maximum balance (12.5k on one of the signature cards, 4.5k on the other). I called Equifax and they told me that they never use the max balance to calculate FICO scores and that I needed to call my credit card company.

I need help! This is ridiculous - in the time since last august I have gotten a mortgage (in august) that I pay off in full every month and have gotten a new card that I pay off in full every month. I never carry a balance and usually spend 5k or so per month (last month was an exception, thus the reported 12k total balance between the three cards). My decent score should only have gotten better - instead, I have taken a huge hit. I did spend a lot last month, but my "true" utilization was still only about 30%, not the ridiculous 322% they claim.

Experian reports my score as 850 on the 500-901 scale and gives the same kinds of reasons, except they treat the visa signature cards as "flexible spending" and complain that my oldest card isn't old enough, leading me to think that they aren't treating my visa signatures as credit cards (since one of them has been open since 2003).

[AndySoCal]

If the credit limit is not reported FICO will use the high balance instead. Is the account type being reported on the SIgnature VISA as Open or Revolving? Also is this credit card wit no preset spending limit knda sort of?

[Anonymous]

Both of the visa signature cards are reported as  "Flexible Spending Credit Card". They have no preset spending limit. The high balance has been reported but isn't being used for the debt/credit ratio: equifax claims that last month I had $12k in credit card spending but only $4k in total credit (so they think I spent $8k more than my available credit), while in fact I have $27k total credit limit ($14k and $9k for the two VISA signature cards and $4k for one other card). The reason they say $4,000 total credit limit is because my other credit card has a credit limit of $4,000 and they told me they treat NPSL cards as having a credit limit of $0 (they told me explicitly that the high balance doesn't factor in when I talked to customer support and then the first level supervisor on the phone).

[Anonymous]

Oh yean, and they both show up as "revolving".

[vanillabean]

It makes sense in your report directly from Equifax that ~$12,000 of ~$4,000 is 322%.

It sucks that a reported high balance from a Visa Signature isn't included in the total credit limit, but at least the math is clear.

To me, the utilization ratio in an Equifax report from myFICO on the other hand makes no sense whatsoever, not now and not at earlier times. The math is furthermore not broken down.

I have recently purchased a Equifax Score Power from myFICO and will soon directly from Equifax purchase a 3-in-1 credit report with a free Equifax score.

I expect each of the credit card balances to be about the same, and I expect the scores to be about the same, but I have reason to believe the two utilization ratios will be very different.

[Lel]

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@Anonymous wrote:

I have 2 visa signature cards and a chase card. The visa signature cards have limits of 13800 and 9500 respectively, the chase card has a limit of 4000. I got my free annual credit report from equifax and, as many have noticed, there is no credit limit reported for the visa signature cards. The high balances do show up on the account information for each of the two accounts. However, my credit score (I purchased it from equifax along with the report) is substantially lower than it used to be (680 versus 740 - 760 last august), with the reason given being that my credit utilization is too high. In the summary table, my revolving credit utilization is given as 322% (!!!!) : 3 revolving accounts with 12k in current balance and -8k (yes negative 8000!) in available credit. I first called my credit card (FIA), who told me that it was "impossible" to report the credit limit and that the credit reporting agency should be using my maximum balance (12.5k on one of the signature cards, 4.5k on the other). I called Equifax and they told me that they never use the max balance to calculate FICO scores and that I needed to call my credit card company.

I need help! This is ridiculous - in the time since last august I have gotten a mortgage (in august) that I pay off in full every month and have gotten a new card that I pay off in full every month. I never carry a balance and usually spend 5k or so per month (last month was an exception, thus the reported 12k total balance between the three cards). My decent score should only have gotten better - instead, I have taken a huge hit. I did spend a lot last month, but my "true" utilization was still only about 30%, not the ridiculous 322% they claim.

Experian reports my score as 850 on the 500-901 scale and gives the same kinds of reasons, except they treat the visa signature cards as "flexible spending" and complain that my oldest card isn't old enough, leading me to think that they aren't treating my visa signatures as credit cards (since one of them has been open since 2003).

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I just want to clarify something - is the score that you purchased through annualcreditreport.com a FICO score?  What is the scale that they are using?

[Anonymous]

I purchased the score directly from equifax but looking closer it is a "Equifax Risk Score", which ranges between 280 and 850. Hmm.

[Lel]

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@Anonymous wrote:

I purchased the score directly from equifax but looking closer it is a "Equifax Risk Score", which ranges between 280 and 850. Hmm.

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Okay, based on this, you should ignore both the score and the utlization calculation.  They're meaningless and are unlikely to be an accurate reflection of your true FICO score.

The score you obtained is not a FICO score.  It uses similar criteria to evaluate one's history of managing credit, but the formula is different from the FICO score.  This non-FICO score also doesn't seem to account for the problem that arises when credit limits are not reported by the CC issuer, as is the case with Visa Signature cards and recently with the Macy's store card.

The FICO score does make provisions for this, as mentioned by AndySoCal above.  If no credit limit is reported, then the FICO formula uses the "high balance" to calculate utilization.  If neither a CL nor a high balance is reported by the CC company, then the balance is completely excluded from FICO scoring.  Thus, a balance reporting on your Visa Signature cards won't result in a utilization >100%.

However, this method of reporting by Visa Signature cards can be detrimental to your score, if your current balance is close to your high balance.  For example, let's say that your $14,000 CL card has a balance of $7000, and this card's high balance was $8000.  If the true CL was used to calculate your utilization on this card, it would be 50%.  However, because the CL is not reported and the high balance is used instead, then your utilization on this card would be 87.5%.

In any case, you can rest easy.  Your true FICO score doesn't see a utilization of 322%, and your score probably hasn't dropped significantly.  I say "probably" only  because I don't know if there have been any other substative changes to your credit report that could also affect your score.

[vanillabean]

Lel wrote:

"If no credit limit is reported, then the FICO formula uses the "high balance" to calculate utilization."

I have a Visa Signature card. An Equifax Score Power from myFICO has this card listed with a high balance, which is not used in the utilization ratio percentage.

"If neither a CL nor a high balance is reported by the CC company, then the balance is completely excluded from FICO scoring."

It's excluded in calculating the utilization ratio, but I'm not sure it's excluded from the FICO scoring overall.

But I do believe you just gave me the insight to figure out the answer to my question in the Understanding your utilization ratio thread

[Anonymous]

i agree!hahha