The question is often asked as you rebuild your credit, why does credit limit reporting matter when it comes to your credit score?
Credit Limit Reporting and You!
Your utilization percentage makes up 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 reports a balance but no limit, it is generating a false utilization and could be impacting your credit score. As you can see, credit limit reporting is crucial to establishing your credit score.
Why Do Credit Card Companies Intentionally Not Report a Limit
It varies by creditor and the card in question. Many think 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. In order to subscribe to this theory, you have to buy into the conspiracy element. It doesn’t seem too far of a stretch does it?
- 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.
- Balance transfer from another card over to the non-limit-reporting card and then pay it off immediately.
- You can dispute the non-limit-reporting with the credit reporting agencies and the limit will be entered. The caveat to this is that disputing a trade line 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 trade line.
- Some cards have limit ceilings where they will only report your limit under a certain amount.
- 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.
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