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Old Jun 11, 15, 7:27 pm   #1
 
Join Date: Sep 2014
Location: Planet Earth , Solar System
Programs: Aeroplan , AMEX
Posts: 40
Having charge card AMEX Canada not good for your credit score!

I have Business Gold Rewards Card , and check my credit score with both
Transunion and Equifax .

My very first Amex statement had $500.00 on it . ( which I paid in full)

On both Equifax and Transunion Amex card is listed in "other" category and not
revolving accounts like other credit cards . So under credit limit it listed as $500.00 . After few months of use I did not charge a lot so my statements were
either $0 or like under $100.00 .
Last month statement had $661 in charges listed .

To my unpleasant surprise when I updated my score with Transunion and Equifax it showed 15 point drop since last month .
I checked the details for Amex Card :

High Credit/Credit Limit: $661.00
Payment Amount: Not Available
Balance: $661.00
Type of Account: Open
Past Due: $0.00


So credit limit increased to $661.00 and utilization showed as 100% .
That is why the credit score drop .
The system thinks that I maxed out my credit card and punished me for it .
What will happen in the future when I have a for example $800 on a Amex statement ? The system will think again that I went over my credit limit which is now at $661 and lower my credit card score.

I was wondering if your Equifax and Transunion behaves the same way with a charge card , any comments are welcome .

I am debating cancelling charge card and stick with regular credit card like Spg .
ericosuave is offline   Reply With Quote
Old Jun 11, 15, 7:53 pm   #2
 
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If you pay it off before the statement, you avoid this problem. There are many many factors to your score. I pay some of my charge cards after the statement and my score is still high. The high limit will change if you spend more than $661. Your score also drops when new accounts are open, it should go up again after a few months. I would not worry about it.
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Old Jun 11, 15, 10:02 pm   #3
 
Join Date: Mar 2007
Location: Toronto, Canada
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Score is totally "relative"

I applied 2-3 cards each month, from Jan to May 2015. so I have 10+ CC right now
including AMEX Biz Gold, SPG, Air Miles Plat

My scores have stayed around 710 to 730, down and up, up and down
I pay off all bills after statements generate

If you had 800 and drop 15 points, that's still nothing
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Old Jun 14, 15, 8:19 pm   #4
 
Join Date: Nov 2014
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Quote:
Originally Posted by ericosuave View Post
So credit limit increased to $661.00 and utilization showed as 100% .
That is why the credit score drop .
The system thinks that I maxed out my credit card and punished me for it .
What will happen in the future when I have a for example $800 on a Amex statement ? The system will think again that I went over my credit limit which is now at $661 and lower my credit card score.

I was wondering if your Equifax and Transunion behaves the same way with a charge card , any comments are welcome .

I am debating cancelling charge card and stick with regular credit card like Spg .
I can't answer about Equifax vs. Transunion because none of my AMEX charge cards show up on TU (despite the TU pull on apps). But regarding your credit score, I'm fairly confident that utilization % for things in the "other" category is largely irrelevant. I have had plenty of things in there on my EQ report in the past (cell phone contracts, charge cards, etc) and I have never noticed a point increase or drop when they appeared/disappeared.
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Old Jun 14, 15, 10:54 pm   #5
 
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I remember we had a problem with this when we were qualifying for our home loan and had to prove to the lender these were charge cards..since the "minimum payment" may have been higher than normal credit cards?...it was weird.
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Old Jun 15, 15, 12:14 am   #6
 
Join Date: May 2002
Location: Arizona
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In the USA Capital One was reporting this way a while back to avoid the competitors poaching good customers by not showing a credit limit. There was an entire article about it in the NYT or WSJ.
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Old Jun 15, 15, 1:50 pm   #7
 
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Transunion and Equifax should improve their systems to resolve this issue.
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Old Aug 12, 15, 11:43 pm   #8
 
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In my experience, the Canadian credit file will show the maximum balance that Amex ever reported on your charge card. And then it will report the balance on the day of reporting.

There is a guy on redflagdeals that works in the industry and answers questions in an epic thread.

The max amount shown is not a credit limit. (But, it is my understanding, a problem with the way the credit file data is printed out.)

In fact, the credit limit is zero. The utilization would not be calculated on the individual product (charge card), but overall utilization (all products) vs your overall credit (all products). That makes a lot more sense, too.

If all you have is your Amex charge card, your utilization would be infinite. But most card holders would have some credit product on their file.
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Old Aug 13, 15, 5:28 am   #9
cnj
 
Join Date: Aug 2015
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Is the best practice to pay off spending as soon as the charges post to your account? Wouldn't that avoid the problem of having high spend when it reports?

I'm sure there is no limit to how many times you make a payment. Buy $30 worth of gas and $200 worth of groceries, wait for it to post a day later, make a payment. Wouldn't that be OK? Does the charge card let you make a payment before the statement populates?

Or rack up a big charge in the first month, pay it when the statement shows up and then just charge normal transactions from then on. So your monthly charges would always be less than that big initial spend.
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Old Aug 13, 15, 6:17 am   #10
 
Join Date: Feb 2007
Posts: 67
I don't know if I'm 100% correct on this, but:

It's a new account, of course it's going to bring your credit score down...


In my case, I jumped on board with Amex at a super young age (being freshly 18, they were the only bank/lender that would give me credit). Got a Platinum Credit card (not charge).

I spent a lot, and of course only used my Amex. Shortly after my credit score got SUPER awesome, I got a few other "whatever" cards from banks just for the sake of it, but then I jumped on board the Platinum charge bandwagon when I was 19.

Again, I think it brought my score down immediately, but then BAM again, my credit got really good, after using the card normally...

I could be wrong, but I think the charge cards are GREAT for long term credit score increases. I like to think it was my Amex usage that allowed me to qualify for my first auto loan finance (vehicle was $100,000).

Just use it normally, eventually it'll help more then if you never had it.
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Old Aug 17, 15, 7:29 am   #11
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Quote:
Originally Posted by cnj View Post
Is the best practice to pay off spending as soon as the charges post to your account? Wouldn't that avoid the problem of having high spend when it reports?

I'm sure there is no limit to how many times you make a payment. Buy $30 worth of gas and $200 worth of groceries, wait for it to post a day later, make a payment. Wouldn't that be OK? Does the charge card let you make a payment before the statement populates?
So what's the point of having a credit card if you pay off your charges a couple of days after they post? The whole point is having a float for several weeks (aside from any card benefits and miles/points/cashback one receives.
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