How does "no preset spending limit" affect credit score?

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lexrj
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How does "no preset spending limit" affect credit score?

Postby lexrj » Thu Feb 14, 2013 10:20 pm

I was wondering how charge cards report its balance and credit limit on your credit, since they don't have a preset spending limit.

What's the impact on your credit score? Is it recommend to pay off the balance before the statement closing date in order to avoid a high balance on your report?
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MrMosby
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Postby MrMosby » Thu Feb 14, 2013 10:30 pm

High Balance is reported as the limit, so if you consistently spend the same amount it can actually hurt your credit utilization ratio. I.e. If you Charge $5000 consistently, and your only other credit card has a $2500 limit on it, your credit utilization would be 66% which would hurt your score.

If you other combined credit was say $20K and you only spent $1K regularly you would be only utilizing 5ish% of your available credit.

The amount Amex reports is your statement balance, so if you pay it off mid-cycle it does help if you're risking high utilization.
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Money card
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Postby Money card » Thu Feb 14, 2013 10:42 pm

on my credit report, a card with no preset spending limit says it's not reported.

because no one knows how much you will spend, most likely you will spend a different amount each month.

those cards don't have a minimum like other credit cards do. for example my Discover will now read minimum 35.00, credit limit 5,500. regardless of how much i spend whether it's 135.00 or whether I spend 25.00 a month.

since the cards you are talking about are paid in full it, the credit reports read "not reported".

lexrj
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Postby lexrj » Thu Feb 14, 2013 10:50 pm

Anyone know how it works for CSP and the Bofa NPSL cards?
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Current in my Wallet
Amex BCP - 25K (02/12)
Barclaycard Arrival WMC - 15K (10/13)

Future
US Bank Cash +

Socks drawer
Crap One Quicksilver - 1.7K (04/11)
CSP - 15K (03/13)

Scores
FICO EX 772 / TU 765 / EQ 762 - (09/14)
AAoA 2.1

MrMosby
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Postby MrMosby » Thu Feb 14, 2013 10:51 pm

Money card wrote: so it should report as not reported.


Unless this has changed recently I don't think this is true. My Amex Platinum is showing $695 for High Balance/Limit on a credit report I pulled two months ago. I regularly charge $3000+ on the card but pay it off throughout the month. $695 is my actual highest statement balance.

As far as the FICO calculation is concerned it uses the $695 as the limit, so if my statement balance this month was $400 my utilization for the month would be $400/$695.
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MrMosby
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Postby MrMosby » Thu Feb 14, 2013 10:52 pm

Anyone know how it works for CSP and the Bofa NPSL cards?


As far as I know most preset spending limit cards work the same way, I did read somewhere though that you can actually ask Chase to assign you a credit limit to your CSP. But that was a while ago.
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lexrj
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Postby lexrj » Thu Feb 14, 2013 11:10 pm

MrMosby wrote:High Balance is reported as the limit, so if you consistently spend the same amount it can actually hurt your credit utilization ratio. I.e. If you Charge $5000 consistently, and your only other credit card has a $2500 limit on it, your credit utilization would be 66% which would hurt your score.

If you other combined credit was say $20K and you only spent $1K regularly you would be only utilizing 5ish% of your available credit.

The amount Amex reports is your statement balance, so if you pay it off mid-cycle it does help if you're risking high utilization.


Correct me if I'm wrong but when a cc company reports high balance on your account doesn't it affect your score negatively regardless of your total (all accounts) % util? In another words, whatever high balance they report it would always affect negatively.
---------------------------------------
Current in my Wallet
Amex BCP - 25K (02/12)
Barclaycard Arrival WMC - 15K (10/13)

Future
US Bank Cash +

Socks drawer
Crap One Quicksilver - 1.7K (04/11)
CSP - 15K (03/13)

Scores
FICO EX 772 / TU 765 / EQ 762 - (09/14)
AAoA 2.1

MrMosby
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Postby MrMosby » Thu Feb 14, 2013 11:17 pm

Correct me if I'm wrong but when a cc company reports high balance on your account doesn't it affect your score negatively regardless of your total (all accounts) % util? In another words, whatever high balance they report it would always affect negatively.


No, there's an attribute for your revolving credit accounts that is "High/Limit", that's what I'm referring to. I think you are thinking of a situation where your balance is > the high/limit attribute.
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smills228
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Postby smills228 » Fri Feb 15, 2013 12:30 am

I'm not sure about other NPSL cards, but my Amex Charge Card reports as an "other" account--it doesn't have a limit listed, and its balances aren't factored into utilization. It just shows balance and my payment history.
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FutureBillionaire
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Postby FutureBillionaire » Fri Feb 15, 2013 10:27 am

smills228 wrote:I'm not sure about other NPSL cards, but my Amex Charge Card reports as an "other" account--it doesn't have a limit listed, and its balances aren't factored into utilization. It just shows balance and my payment history.


My amex used to do the same thing. Once I signed up for the pay over time feature, my amex showed up as a regular credit card. I tried to move off the pay over time feature, but it reverted back because I received bonus MR points when I moved.
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