What effect does my cards "High Balance" have on my score?

[JasonBourneOfCredit]

I have a secured card with a CL of $200.  I was doing pretty good but I had a bad month and the balace got to $151.

So, now the "High Balance" field at freecreditreport says $151.

Why are they keeping track of my highest amount? Does that affect my score? Now my balance is $23 so its alll good.

[RobertEG]

Jason, there are some CCs that dont have an established CL   Of particular note are many AMEX cards.

In absence of an established CL, FICO will then calculaate your % util on the basis of prior high balance.

So your CR may show high balance, but it is probably immaterial to your account, which has an established CL.

If your card has an established CL that is now requried to be reported to the CRAs.  Your prior high balances then become meaningless.

If they are not reporting your CL, and you have one as part of your terms of revolving credit, then they are in violation of 16 CFR 660.3.

[JasonBourneOfCredit]

Ok, so since it does have a CL reporting (200) it doesnt really matter. But if it didnt, the high balance would stand in as the CL.


For instance, I have a CFNA (Tires Plus) account. FOund out after I got it that they dont report the CL. Is this legal?


Anyway, my CL is 800 but its not showing on my report. I charged 405 and have 329 left to pay. So with no CL reporting from them it looks like:


 
 Account Name    CREDIT FIRST N A    
    
Account #    69407XXXX    
    
Account Type    Revolving Charge Account    
    
Balance    $329.00    
    
Date Opened    7/1/2010    
    
Account Status    Open    
    
Mo. Payment    $13.00    
    
Past Due    
    
    

    
    Payment Status    Current    
    
    
    High Balance    $379.00    
    
    
    Limit    
    
        
    Terms    Revolving    
        
    Comments    
              

I need to pay this then close the account, right?


thanks man

[haulingthescoreup]

Since the Tires Plus account reports the highest balance but not the CL, it will figure your util based on the high balance. So it would be reported balance divided by $379 instead of by whatever the CL is.

I don't know that I'd close it just for this reason. You just need to pay off the balance before the statement drops so that it reports $0. But if you don't use the card much, or there are annoying fees, that's different.

You might want to read fused's Closing Credit Cards to help you think through the pros and cons.

[AndySoCal]

Hauling,

I found this article and I have posted it in couple places see link below. Per FICO they are no longer using the high balance in the FICO model.

http://www.foxbusiness.com/personal-finance/2010/08/31/charge-card-balances-wont-impact-fico-credit-...

Until I read this article I would have agreed .

[haulingthescoreup]

---

@AndySoCal wrote:

Hauling,

I found this article and I have posted it in couple places see link below. Per FICO they are no longer using the high balance in the FICO model.

http://www.foxbusiness.com/personal-finance/2010/08/31/charge-card-balances-wont-impact-fico-credit-...

Until I read this article I would have agreed .

---

Good to know, and I hope it's so. But I was looking at OP's copy/ paste, and there was nothing in the CL field.

Maybe they'll get around to reporting the CL soon!

[vanillabean]

Based on a post by fused a couple of months ago, I got the impression that when the account type is revolving and no credit limit is reported, the high balance is used for util in lieu of the credit limit.

[vanillabean]

Might as well throw in my interpretation too. I view an account type of "Revolving" to mean "Revolving Credit Account".

OP's account type says "Revolving Charge Account", so my guess is the account is not used for util (except for TU 98).

[RobertEG]

FICO has only one category scored as  revolving credit.  It either is scored as revolving, or it isnt.

Crdit cards, regrdless of whether they specifiy a preset credit limit or not,  are revolding credit.  So are lines of credit, such as HELOCS  below a certain limit of offered credit or personal lines of credit, secured or unsecured.

High balance is used for revolving credit scoring wherin the creditor did not report a firm CL to the CRA on the revcoliving credit.

Prior to 7/1/2010, creditors were not requried to report a CL on their revolving credit accounts with you, even if one was established in your terms of agreement with them.  That all changed as 7/1/2010.  If they have, in their terms of agreement with you, or in their records, an estblished credit limit, they are now requried to report it to the CRAs.

Then FICO has a CL, and not just a highest balance, upon which to do your scoring of % util.

Of course, it there is not an agreed CL, then the creditor does not have to report a CL that does not exist.  Then high balance is the only remaining way for FICO scoring of your approximated % util.

See 16 CFR 660.3, and 16 CFR 600, Appendix A.

[AndySoCal]

I read the post by Fused and agrred with 95% of what was said. At that time I would have said almost the same thing. The key thing in this article was that the information is coming from FICO themselves.