Visa Signature Credit Card Credit Limits and Impact on Credit Score
Guest: hdporter
Credit Expert (100+ Posts)
Post subject: Visa Signature Credit Card Credit Limits and Impact on Credit Score
Posted: Tue Sep 12, 2006 1:18 pm
It's been suggested I cross-post the following topic I entered on the General Credit forum to this forum:
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I've reviewed my credit scores via myFICO over the last 2 months (3 dates) and have strong confidence in the following observations for a VISA Signature account on which no credit limit is being reported:
When the Signature account is reported with account type "Open" (no fixed limit), a current balance:high credit ratio doesn't adversely affect your credit score. However, if reported as a "Revolving" account, it will.
On all dates in question, with identical balance/limits/high balance reporting for accounts, my Experian report reports my V-Sig a/c as "Revolving" and lists high utilization as one of the two highest factors negatively impacting my score. My TU and Eq reporting lists the account as "Open" and doesn't flag utilization as a negative factor. (FWIW: I'm carrying a balance on my V-Sig a/c that is over 90% of the reported high credit.)
A distinction in the treatment of the two types of reporting makes sense. While FICO often betrays some irrationality, utilization scoring is straight forward. While "high credit" is used as a proxy for "credit limit" when a CL isn't reported for a revolving a/c (as is the infamous case with Cap One), it's an undisputable fact that "Open" accounts won't have a reported limit under any circumstance. They're excluded from the utilization calculation in the same way that installment accounts are. The wording of the utlization scoring factor explanation is explicit in citing "revolving/charge" accounts.
I think this is a significant factor to take into consideration. If this is an accurate observation, and you live in an area where creditors infrequently pull your Experian, a VISA-Signature account presents the opportunity to load a low/no interest account up to the limit without the severe hit to your credit score. It's simply an opportunity to consider (no need to tell me that "FICO doesn't pay my bills, ok?
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An anecdote on this note with respect to Chase, who is one of the creditors who doesn't report a limit on Sig a/c's (US Airways Div / Barclays is another):
About 10 days ago my wife and I both separately called Chase to request limits be reported on our respective accounts with in minutes of each other. We received follow-up letters Friday -- my letter confirmed the revised reporting, and provided addresses at which to contact the credit bureaus to ensure the change is reflected in my reports.
My wife, on the other hand, received a letter from a different credit analyist in the same department (same contact info) assuring her that her account is accurately being reported (stating the balance) -- no change is being reported.
In light of my comments above and an 18 mo 0% promotional rate on her account, I look to pop about another $10K on top of the current $5K carried on her account. I'll be watching her TU/Eq reporting and will report back.
FWIW: Each of our Experian reports have been pulled only twice in the last two years -- in both cases one of those pulls was Cap One (who can go f* themselves: the V-Sig reporting should be no mystery to them).
- Harry
A footnote: Some of the reports from the bureaus obscure the "Open"/"Revolving" distinction in account type. There's an unfortunate over lap in these terms when it comes to Account Type and Payment Terms/Account Status.
A VISA-Signature Account is an "Open" (type) account, but has "Revolving" Payment Terms. And, of course, any active account is reported with an "Open" Account Status.
The only report source that is absolutely crystal clear in differentiating VISA-Signature accounts as being "Open" (type) is the summary from myFICO. (Some others do annotate the account as "Open", but it's hard to distinguish that description from others ... at least one of the others doesn't report the distinction for any "Open" account (from what I can tell).
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Credit Expert (100+ Posts)
Post subject: Visa Signature Credit Card Credit Limits and Impact on Credit Score
Posted: Tue Sep 12, 2006 1:18 pm
It's been suggested I cross-post the following topic I entered on the General Credit forum to this forum:
-------------------------------------------------------------------------------------
I've reviewed my credit scores via myFICO over the last 2 months (3 dates) and have strong confidence in the following observations for a VISA Signature account on which no credit limit is being reported:
When the Signature account is reported with account type "Open" (no fixed limit), a current balance:high credit ratio doesn't adversely affect your credit score. However, if reported as a "Revolving" account, it will.
On all dates in question, with identical balance/limits/high balance reporting for accounts, my Experian report reports my V-Sig a/c as "Revolving" and lists high utilization as one of the two highest factors negatively impacting my score. My TU and Eq reporting lists the account as "Open" and doesn't flag utilization as a negative factor. (FWIW: I'm carrying a balance on my V-Sig a/c that is over 90% of the reported high credit.)
A distinction in the treatment of the two types of reporting makes sense. While FICO often betrays some irrationality, utilization scoring is straight forward. While "high credit" is used as a proxy for "credit limit" when a CL isn't reported for a revolving a/c (as is the infamous case with Cap One), it's an undisputable fact that "Open" accounts won't have a reported limit under any circumstance. They're excluded from the utilization calculation in the same way that installment accounts are. The wording of the utlization scoring factor explanation is explicit in citing "revolving/charge" accounts.
I think this is a significant factor to take into consideration. If this is an accurate observation, and you live in an area where creditors infrequently pull your Experian, a VISA-Signature account presents the opportunity to load a low/no interest account up to the limit without the severe hit to your credit score. It's simply an opportunity to consider (no need to tell me that "FICO doesn't pay my bills, ok?
------------
An anecdote on this note with respect to Chase, who is one of the creditors who doesn't report a limit on Sig a/c's (US Airways Div / Barclays is another):
About 10 days ago my wife and I both separately called Chase to request limits be reported on our respective accounts with in minutes of each other. We received follow-up letters Friday -- my letter confirmed the revised reporting, and provided addresses at which to contact the credit bureaus to ensure the change is reflected in my reports.
My wife, on the other hand, received a letter from a different credit analyist in the same department (same contact info) assuring her that her account is accurately being reported (stating the balance) -- no change is being reported.
In light of my comments above and an 18 mo 0% promotional rate on her account, I look to pop about another $10K on top of the current $5K carried on her account. I'll be watching her TU/Eq reporting and will report back.
FWIW: Each of our Experian reports have been pulled only twice in the last two years -- in both cases one of those pulls was Cap One (who can go f* themselves: the V-Sig reporting should be no mystery to them).
- Harry
A footnote: Some of the reports from the bureaus obscure the "Open"/"Revolving" distinction in account type. There's an unfortunate over lap in these terms when it comes to Account Type and Payment Terms/Account Status.
A VISA-Signature Account is an "Open" (type) account, but has "Revolving" Payment Terms. And, of course, any active account is reported with an "Open" Account Status.
The only report source that is absolutely crystal clear in differentiating VISA-Signature accounts as being "Open" (type) is the summary from myFICO. (Some others do annotate the account as "Open", but it's hard to distinguish that description from others ... at least one of the others doesn't report the distinction for any "Open" account (from what I can tell).
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
