Palaimo

This might not be the best place for this, but since a lot of people that read this thread have the traditional AMEX charge cards, I figured I might be able to get a good response here.

I am having a hard time finding the answer to this question, and have done a lot of searching but have found mixed results.

How does a "No Preset Limit" card impact your utilization ratio?

I have read some places that they are not calculated at all into your utilization ratio, other places that they use your high balance as your "limit", and still other places that they will only be calculated if they are reported as a "revolving" account rather than an "open" account - in which case they use the high balance as the limit.

My most recent look at my credit report (using AMEX "credit secure") shows it reporting as an "open" account on TU and EQ but as merely a "credit card" (with no indication of "open" or "revolving" account type) on EX. My EX score is also (marginally) lower than all other cards.

My usage is fairly consistent, so if the high balance is used as the limit in terms of calculating usage, this would really hurt my utilization ratio.

My real reason for considering all of this, is that if "high balance" is ever used as the "limit" in terms of utilization, I will put a few larger purchases on the card to try to lower my utilization. If not, actively increasing my high balance certainly doesn't help me at all.

Any thoughts or experience?

SteveT

A charge card is considered an "Open" account and should not be factored in the Utilization Ratio. That being said, there are several FICO scoring models that will factor them into the Utilization Ratio, such as TU Classic FICO. FICO 2008 will not consider it as part of the Utilization Ratio.

The problem I have with FICO is there are several scoring models that are inconsistent with each other. Drives me crazy.

pcharles

High balance is reported monthly and remains and monthly dynamic variable against credit utilization of entire credit. But what's different is the weight of the variable versus individual account credit utilization factor (pre-set credit limit) coupled with combined utilization.

forumpersona999

Here in Hong Kong, Amex report my charge cards to TransUnion in a very unfair way...

They report my last statement balance (statement date for me is around the 6th of each month) as my "credit limit" to TransUnion.

I usually pay by the 20th of each month but Amex' TransUnion upload/reporting is done on the 30th.

Now what it looks like is my last statement balance is my credit limit and my utilization is whatever my balance on the 30th is. This has impacted on my score a few times where I got a bill, paid it in full, then made a big purchase between the 20th and the 30th.

I wonder what would happen if I had a low activity month, pay it and then charge double what my last month's statement balance was between the 20th and the 30th. 200% utilization ?

I complained to Amex and TransUnion HK to no avail.

Anyway now that they explained the system to me I can game it. If I overpay and have a credit balance on the reporting day, no credit limit shows on TransUnion.

If your FICO is important to you this may work in the US as well !?

pcharles

Always pay big right before reporting day, it's an advantage regardless of card type

forumpersona999

Yep that's what I learned A hassle though when due date is around 20th and reporting date is on the 30th. I have to make two payments each month to ensure top score.

Palaimo

Yea this is a real pain - and thanks for all of your responses.

I guess what I was trying to figure out is if I would be benefitted long term if I puts some big purchases on this card to increase the "high balance" so that (at least for any model that uses high balance as a "limit") my utilization will go down.

ddallas

As others have mentioned above, all the things you read are true in some cases depending on how the card reports and which scoring model used.

Limits of specific cards were also sometimes reported differently by EX, TU, and EQ. As a result, maybe three or four years ago, I would do the "big purchase" on a new card to have the reported limit (high balance) be higher for utilization purposes on my reports. Then Experian and Equifax stopped reporting that way and excluding those accounts. I'm not sure how Vantage score or any of the others use it, most of those are not used much by creditors anyway.

In a nutshell, I would say that "high balance" reported as credit limit was a big factor for maximizing score years ago, pretty much affected all your scores, now you see it less and less as time goes on.

I know it is not a factor in the newer FICO08 scores so I don't bother with it anymore.

TommyC80

I had an issue with this recently. I am applying for a mortgage and my last amex statement was about 85% of my highest past balance.

Before my statement cut, I paid off last month's charges and all but $50 of my current month charges.

My TU FICO (classic) jumped 12 points, actually putting me into a lower rate category

No effect on EQ or EX.

Had I not done this it could have cost me a lot of money over a 30 year mortgage...

TommyC80

Except that many mortgage lenders do not use FICO08....YMMV (see above post)

krpjr

No preset limit - On this topic, if you charge $20k this month, other card issuers will see that at one point you charged $20k, paid it off and you were able to handle that amount.

With that determining factor it can make or break what you'll get approved for. Some cards cannot be opened with less than a $15,000 limit for example.

Palaimo

As opposed to a credit card where a high balance might just mean you weren't paying your bill on time for an extended period of time? I guess I didn't really think about that difference - since I always pay ALL my bills in full.


I guess I just need to decide if it makes any sense to put more spend on my PRG Amex (when I would much prefer the starpoints from my SPG Amex) on the off chance that a creditor uses an old model or would be "impressed" by ability to pay off the balance.

Thanks for your thoughts everyone.

accrue450

Does anyone know whether amex plat constitutes part of your FICO score? As it is a charge card and not a credit card, does it have a different impact on your FICO?

I ask because I just got my free credit report, and while all of my other "real" credit cards are shown with details like credit line limit and a month by month report as to whether something was overdue or a-ok, my amex plat card does not even appear. I do see that amex did a credit pull on me when I applied for the card, but again, the card itself does not show up among my other cards.

So does this mean that by putting a lot of spending and paying off on the amex plat card in a timely manner, my FICO score would not improve over time, or at least it would improve less than if I did the same with a real credit card?

longhorn11

When did you apply for the card? It should at least show up but it should not count in your utilization ratio. It can take at least 2 statement cycles for amex to start reporting to the credit bureaus.

DelrayChris

It is absolutely reflected in your credit report and FICO score.