| Credit cards that hurt your credit
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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.
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.
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