Dear Credit Card Adviser,
My yearly credit reports from the three agencies each report an inaccurate high balance to credit limit value with the same financial institution. The rare charges placed on the card have never exceeded 50 percent of the credit limit. My scores usually range in the low- to mid-800s. Is this issue worth disputing?
— A. Brewer
Dear A. Brewer,
Different scoring models have different score ranges, but a FICO score in the low- to mid-800s is a great credit score. Pushing it higher likely won’t make a difference in your ability to obtain lower interest rates on loans and credit cards.
From the phrasing of your question, it sounds like you’re talking about the “high balance” or “high credit.” That is, the highest monthly balance you have ever owed on that credit card account or during a particular period of time as determined by the issuer.
In some cases, this amount can impact your debt-to-credit limit ratio, or utilization, which contributes toward a factor worth 30 percent of your FICO score.
“It only matters if the account is a revolving account,” says Barry Paperno, the consumer operations manager at FICO. “And, it only matters if there is no credit limit being reported. Otherwise it does not matter to the score.”
Check your credit reports to verify whether the account is revolving or some other type of account. For instance, charge cards, which tend to be pay-in-full products, likely won’t be listed as revolving accounts. Only in cases where a revolving account has no reported limit or a limit of zero, does the high balance come into play.
So, unless your creditor isn’t reporting the limit accurately, an innacurate high balance won’t hurt your score. For those exceptions, the high balance would serve as the credit limit for the purposes of calculating the utilization. A monthly balance that comes close to the high credit when the account doesn’t have a reported credit limit could lower your score just like nearing the credit limit would.
Hope this explanation helps you make a decision.
Ask the adviser
Follow Leslie McFadden on Twitter.