FICO Scoring and Unlimited AMEX Centurion Cards

[Anonymous]

     I love my AMEX Centurion card in that I use it for travel and hotels because I get benefits like I’m Bill Gates while I am only Ytzak Schmuck. Please, this is not a thread geared around whether charge cards are good or bad; but a request for information from those that know or have viable/personal data. How does FICO score these type charge cards? I mean, they are charge cards in that we PIF monthly, but AMEX is offering deals (at least for me and others like me) that allow us to defer PIF for 6-months without interest like a credit card.

     What I like about the card is that large purchases (aside from the great perks) do not require the insulting, showroom approval. We can go on line and tell the computer how much we will be requesting ($50,000 for example). The system will immediately authorize that amount or you will receive a call from AMEX requesting further information. You don’t even need to leave your house before you know that you can buy that “whatever” on your card. https://thepointsguy.com/2015/11/man-uses-amex-card-for-very-expensive-painting/

     But for the forum, how does FICO score that? For the last years FICO has not calculated it into my account (after the initial new account etc.) because it has always been PIF. I know if the billing date and reporting date differ, you may see the “High Balance” on your CR, but I surmise that FICO has some algorithm that accounts for that. But unless you are doing the mortgage thing (which a descent LEO will suffice that this has had no affect) I do not know how it will register. But now that AMEX is offering this benefit, how will that score? Maybe some of the gurus on the site (TT, CGID etc.) can give me some guidance.

Thanks

Y

[Anonymous]

To recap our OP's question, he's observing that he has a charge card, which are traditionally cards in which the user is required to pay the balance in full every month.  FICO 8 does not count the reported balance of a card like this into its revolving utilization calculation.

He also is observing that Amex has been offering the ability to turn off this "charge card" aspect and treat it like a credit card, i.e. he would could only pay a small portion of the balance and carry the remainder onto the next month.

OP's question:

If I turn it into what is in effect a credit card, is it still excluded from my utilization or does FICO begin including it?  Or does FICO do something else entirely?

Have I got that right?

TT knows quite a bit about how FICO 8 handles Amex charge cards, and he may also know the answer to this.  Hopefully he will chime in.

PS.  Note that earlier versions of FICO (e.g. the FICO mortgage scores, at least the EX mortgage score) do not ignore the balance of charge cards, but rather use the card's High Balance as a proxy for credit limit.

PPS.  You write that "AMEX is offering deals (at least for me and others like me) that allow us to defer PIF for 6-months without interest like a credit card."  Strictly speaking, when one fails to PIF, a credit card DOES charge interest.  So while allowing you to carry the balance over to the next month is behaving like a credit card, not charging you interest is not like most credit cards.  In fact, you avoid paying interest typically on a credit card only when (like a charge card) you pay in full.

[Thomas_Thumb]

I believe all AMEX charge cards are handled the same regardless of green, gold, platinum or centurian status by Fico.

1) The cards are classified as open accounts with 1 month (or 30 day) terms.

2) The charge card is included in the open accounts with balances "count factor"

3) The charge card is not included as part of revolving account activity as I received the "no recent activity on revolving accounts" when only my AMEX charge and an AU card reported balances.

4) An older Fico model, Fico 98, looks at NPSL charge card utilization in terms of balance/high balance. Say you had a HB of $7.5k and then charge/report $50k on a subsequent statement. Your new HB will be $50k and the card UT will be B/HB = $50k/$50k = 100%. Then you PIF and the following month have a statement balance $5k. Now your card UT will be 10%. It would have been 67% of card HB had HB not increased from $7.5k => $50k.

5) Fico 04 and the newer Fico 8/Fico 9 models do not look at NPSL charge card utilization. They ignore B/HB.

6) Neither NPSL charge card balance nor high balance are used in the newer Fico 8/9 models aggregate revolving utilization calculations. However, they may be included in the older Fico models ... not sure on that.

[Anonymous]

You have it exactly right CGID.

Thanks

[Anonymous]

Thanks TT.  

If I understand you right, you are saying that even if our OP turns his charge card into a defacto credit card (by Amex permitting him to carry large balances and only pay a small portion of them), that fact will be invisible to FICO.  And therefore even though the Amex card is being used as a credit card (possibly with balances of 30k or more) it will still be ignored in the revolving utilization calculation by FICO 8 -- just as it was when it was being used as a true charge card.

I think this is our OP's key question.

[Thomas_Thumb]

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@Anonymous wrote:

Thanks TT.  

If I understand you right, you are saying that even if our OP turns his charge card into a defacto credit card (by Amex permitting him to carry large balances and only pay a small portion of them), that fact will be invisible to FICO.  And therefore even though the Amex card is being used as a credit card (possibly with balances of 30k or more) it will still be ignored in the revolving utilization calculation by FICO 8 -- just as it was when it was being used as a true charge card.

I think this is our OP's key question.

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CGID, thanks for clarifying.

I had the "pay over time" feature on my AMEX NPSL charge card without realizing it. I always PIF every month after balance reports so never carried a balance over. The balances that did report monthly were not considered revolving. Thus, the score ding for "no recent revolving account activity" when only AMEX and an AU card reported a balance. I did have AMEX remove that feature - I have enough revolving credit and want AMEX as a pure play charge card.

Regarding the OP's question,  I can't say how the balance and account would have been treated if carried over some amount. I never utilized the pay over time feature - as interest fees would then be applied. Perhaps if the OP tests he can let us know.