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Credit cards that hurt your credit score
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Creditors who do not report high balances are not breaking any rules under the Fair Credit Reporting Act, according to Office of the Comptroller spokesman, Dean DeBuck.

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A customer service manager at Citibank offered Citrano the opportunity to close the card or switch to another Citibank product.

"The thing is, I like the card. It gives me rewards like air miles, and I have perks that are not offered on other cards. I'm a businessman who spends a lot of money using my credit cards, but I never expected that with my income, and credit score and history, that I would be faced with disintegrating credit."

What consumers can do
Since credit card companies that offer no-limit cards will often use the highest balance in place of the limit to calculate your credit utilization, there is a way to improve a credit score.

Watts says consumers who hold no-limit credit cards can work around the lack of a credit limit by running up a high balance one month and paying it off. That way, you have a high-balance number in place of a credit limit, reducing your credit utilization percentage. Of course, that only works if the credit card issuer reports the highest balance.

If it doesn't, one recourse would be to close the account. Another would be to ask your creditor to report your balance. However, according to Terry Clemans, executive director of the National Credit Reporting Association, there is no guarantee that your credit limit or highest balance will be reported month to month.

"We always hope that any and all information about consumers is reported to the credit bureaus, and we can only hope that if more people learn about this, the issues will take center stage," says Clemans.

However, one concern is that most people don't know what the no-limit card has done to their credit rating.

"Generally speaking, most of the affluent consumers with no-limit credit cards might not notice a significant drop in their credit score because they are very busy," says author and consumer advocate Evan Hendricks. "These are businesspeople with busy lives and believe because they are the cream of the crop in the credit-scoring field they are getting a rewarding handshake by their creditors."

The most damaging issue about unreported information is that many consumers find out about the problem when they go to apply for mortgage or car loans.

The best way to protect yourself is to check your credit reports at all three credit bureaus to find out what information is listed.

Bankrate.com's corrections policy -- Posted: March 31, 2006
More stories by Kristin Arnold
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