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In fact, an important component of a FICO credit score is credit utilization.
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If your revolving credit limit is reported and your spending ends up surpassing it as a result of all the encouragement from your credit card company, your credit utilization will reach 100 percent.
FORBES: The Pitfalls of No Pre-Set Spending Limit Credit Cards
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Because of the importance of a credit limit to your credit score and the lack of a communicated limit to consumers, the question must be posed: How does FICO determine credit utilization on NPSL cards when there is no credit limit?
FORBES: The Pitfalls of No Pre-Set Spending Limit Credit Cards
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According to a recent CardHub.com study, in the absence of a true credit limit, issuers report to credit bureaus either the highest balance reached with an NPSL card over a certain period of time or its revolving credit limit for the determination of credit utilization.
FORBES: The Pitfalls of No Pre-Set Spending Limit Credit Cards
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Higher credit limits mean lower utilization, which could boost both of your FICO scores.
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Similarly, if a high balance is reported as your credit limit and your spending is fairly consistent, your utilization ratio will hover near 100% on a monthly basis as well.
FORBES: The Pitfalls of No Pre-Set Spending Limit Credit Cards
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These are hardly excessive growth rates in normal times, much less in an economy with almost 10 percent unemployment, with capacity utilization down from the 80s to the 60s, and with nonbank credit sinking, productivity growing rapidly, and with unit labor cost declining.
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