I am glad you asked...
Why do I care if my credit limit is reported?
Your utilization percentage is 35% of your FICO score. What this means is that the FICO formula takes your total revolving credit limits into account, then your outstanding balances, and then determines the percentage of limits that you are currently using. When a creditor such a CAP1 reports only your highest balance and your current balance your actual credit limit is not being considered, which ultimately results into false utilization for that card.
Let's say your CAP1 card has a $10000 limit but you have only charged a maximum of $2000 in a single statement period. CAP1 will not report your $10000 limit but instead will report your $2000 high balance. Since no CL is reported, FICO defaults to your high balance entry. This past statement period you charged $1000 and CAP1 reported your current balance as $1000. FICO thinks that you are now using 50% of your credit limit instead of your actual utilization of 10%. As most of us know a utilization figure of 50% will have a negative impact on this account. Furthermore, FICO also takes your total utilization on all of your revolving lines into account, thus likely lowering your scores even further because now you are overextended on your CAP1 and possibly overextended overall.
Why do some CCCs do this?
It varies by creditor and the card in question. Using CAP1 above, IMO it is to purposely keep your scores lower so that they are able to make more money at your expense in higher interest rates because of lower scores.
What can I do?
Remember to do your homework and choose the best option for you!
1. The cards that do not report limits usually do report your high balance so you can charge up the card to near the limit then pay it off immediately.
2. Balance transfer (BT) from another card over to the non-limit-reporting card and then pay it off immediately.
3. You can dispute the non-limit-reporting with the CRAs and the limit will be entered. The caveat to this is that disputing a tradeline for anything could result in it being deleted completely. Also, be prepared for the limit reporting to disappear the next time the creditor updates your TLs.
4. Some cards have limit ceilings where they will only report your limit under a certain amount. Juniper is a perfect example. If you have a Juniper card with a $7000 limit and it is not reporting you can call and request a credit limit decrease (CLD) to under their ceiling of $5000. The limit should then be reported during your next statement cycle.
5. Beware of “Signature” cards. They are usually advertised as such and boast that there is no preset spending limit or that you are allowed to go over your limit as long as you pay the overage before the next statement date. These cards generally do not report a limit because it is technically "flexible". Avoid these cards if you are concerned about non-limit-reporting. Many issuers such as Citi will allow you to convert to a different card at any time. The Citi Premier Pass is a good example of a card you will want to convert to another Citi card such as Platinum Select because the PP does not report your limit.
6. Some store/retail cards do not report your limit but only your high balance. To fix this, simply purchase merchandise from that retailer and return the merchandise within their return period. The length of time that you had the merchandise does NOT matter, only that the charges posted to your account.
Hopefully this will help you boost your scores and not fall victim to the growing lack of credit limit reporting. Feel free to post any known non-limit-reporting cards and experiences with non-reporting-limit cards.
Message Edited by Tuscani on
05-07-2007 06:25 PM
