Charge cards without limits could hurt your FICOHaving a good credit score is important. We here at WalletPop have told you how to get or keep a good credit score, and how to fight back against reporting mistakes that can harm your score. But there's one particular type of quirk that could be hurting your score without your knowledge: cards without preset spending limits.

One very important part of your FICO score is what's called your utilization ratio. That's the percentage of your available credit that you're using during any given period. For instance, if you have a credit card with a $10,000 limit and you have a $2,500 balance, you have what many experts would consider to be an ideal ratio. But if you have a $10,000 credit limit and you're maxed out, you look like a riskier customer. The result: A lower score.

So if you have a card with a set limit and you keep your transactions and balances to around 25 percent of that limit, you're golden. But some cards out there don't have preset spending limits, and this is where things can get tricky, according to Barry Paperno, consumer operations manager for FICO.

Charge cards, for which you have to pay off the balance in full every month, don't have preset credit limits, but since they're what the industry terms "open" credit instead of "revolving" credit, the lack of a limit can't drag down your score. But credit cards that don't have preset spending limits are another story.

"These no preset spending limit accounts are somewhat of a hybrid," Paperno explains."They have a credit limit and up to that limit, they behave like a credit card, but it also allows you to exceed the limit. The amount you exceed it by is due in 30 days just as a charge card would require." As a result of this dual nature, it's up to the issuers to decide if they want to report these cards as charge cards or as credit cards.

If they report them as charge cards, your score won't take a hit. But if they report them as credit cards, you could lose out. "If there's no limit, the score will look to the 'high credit amount,' which is typically the highest the balance on that account that has ever been, or has been within a certain period of time," Paperno explains.

In other words, if you charge a similar amount every month on that card -- whether it's only a hundred bucks or several thousand -- it's going to record your balance and your limit as being the same, which makes it look like you're maxed out. For purposes of your credit utilization ratio, this is killer. How much it could drag down your score depends on a slew of other factors like how many cards you have and what their credit limits are, but it could ding you significantly if you rely on this card as your primary one.

This is one of the (many!) reasons why it's so important to be familiar with your credit report. We've said it before, but it bears repeating: You can get your credit report once a year for free by going to Haven't gone there in a year (or ever)? Go do it now!

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Do yourself a "HUGE FAVOR" and carefully read this:

The 21st Century Act: Final Amendments to Regulation CC Section:
"Prohibits" reimbursement of Credit, Loan, and Finance Balances to a "Bank Entity" leaving only "Nonbank Consumers" able to receive reimbursement, as specified on Pages 85 and 86.

The 21st Century Act states on pg. 85 and 86 that "Only Nonbank Consumers can suffer losses and File for
Re-credit or Re-claim on any Accounts under the Federal Reserve System" also “Any Second or Third Party Presenters utilizing a Banks Documentation, Contracts and/or Agreements to seek Claims shall be considered to be that Bank under the Rules and Regulations”, the Expanded Definitions also includes Credit Cards and Home Equity Lines of Credit.
Also on Pages 100 and 101 "In any Financial Claims the Indemifying Bank (Parent Bank) must be Identified".

(Left-Click to Search Link)
21st Century Act: Final Amendments to Regulation CC

This Federal Law signed January 1, 2006 makes it "Fraudulent" and therefore "Illegal" for the 3 Major Personal Credit Reporting Agencies: Equifax, Experian, and TrasUnion to allow the Banks and the Banks "Third Party Presenters" to place any claim of "Negative" or "Potentially Negative" Accounts on your Personal Credit Based upon the fact that they have no "Legal Grounds or Claim" to the Money.

This is an "Unfair Practice" that diminishes our Financial ability to support ourselves and adversely affects our ability to gain work in many areas which breaks "Antitrust Laws".

These Rules also back claims of: "Aiding and Abetting" Racketeering and Extortion (of Finance Accounts and Personal Credit Reports), Pandering (of Credit and Loan Accounts, and Conspiracy to wit), Theft, Fraud, Federal Mail Fraud, and Telephone Harassment. Also "Threatening of the U.S. Financial Infrastructure", which is a "Capital Crime".

In order to engage the Federal Trade Commission to act against this injustice we must File many Claims, as these Reports must be Filed by a large number of people in order for the Federal Trade Commission to pursue
"Legal Action".

(Left -Click to engage Email Address)

This is way easier than "Occupying Wall Street"!

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January 12 2012 at 5:32 AM Report abuse rate up rate down Reply