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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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