Capital One Will Report Credit Limits By End of Year
Wow. Can you believe it? After all of the criticism that Capital One has received for years by not reporting credit limits to credit reporting agencies, they are caving and will be reporting them by the end of the year.
What’s the big deal? Well, the big deal is that the credit reporting agencies, in evaluating your credit and calculating your score, take your credit utilization into account as a big factor. Since Capital One didn’t report a limit, their scoring formulas could only take the highest known balance and use that as your limit.
And what does all that mean? If you have a card with a $10k limit and you use about $2k a month, even if you pay it off every month, the scoring formula would look at that $2k and say you’re at about 100% utilization on your card because the highest you’ve used was $2k and you’re at about $2k now. You really should only be at about 20% utilization ($2k used of your $10k limit), which is much kinder to your credit than 100%!
I’ve tried in the past to get the CRAs to recognize this on my own credit reports, but had no luck. I’m glad to see lots of pressure and threats of legal action against Capital One finally got them to give in on this.
For those of you who use a Capital One card, you can probably expect to see this help your score. Also, if you were heavily affected by this lack of credit limit reporting, whether you knew it or not, you will most likely see new and better credit card offers in the mail soon after your score is impacted.
We just stopped using our Capital One card because we’re now exclusively using our Chase rewards credit card. At least having a Capital One card will no longer irritate me, I guess.
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