Photo of a credit card aplication
Credit card companies may be hurting your score. CC by rubenerd/Flickr

Everyone has been told that credit cards should only be used every now and again and then paid off right away to boost your credit score. There’s some truth to that, but sometimes that practice can actually hurt credit scores. Credit card companies don’t want their customers to leave them. So sometimes, some of them do things that aren’t honest to ding scores. Some credit card companies don’t report things to the credit bureaus accurately. Credit card companies do have to stick to the new CARD Act. However, they are finding ways around it.

How credit card companies skew reports

Having a credit card won’t hurt your score. Neither will using it. However, what the credit card company reports could hurt your score. Hypothetically, let’s say a card user has a $300 card. If the card limit is $3,000, the credit card company should report to the credit bureaus that the cardholder is using 10 percent of her available credit. This is called a credit utilization ratio.

Reporting is not always accurate

Some credit card companies skew the numbers to make it look like the cardholder has a much higher credit utilization ratio. Instead of reporting the percentage of your total credit available that the cardholder is using, they report the percentage as compared to the highest balance that card has carried. For instance, say the highest amount a card user has ever charged on his card was $600. When that cardholder puts the $300 charge on his card, the card company reports that amount compared to $600 and tells the credit bureaus that person is using 50 percent of his credit. According to US News and World Report, this somewhat common. Credit card holders should regularly check their credit reports and dispute anything that doesn’t add up.

Do not give them the satisfaction

Customers complain about the credit card companies for a reason. Card issuers won’t, according to CNN, tell customers what their penalty rate increases are. There are also plenty of stories out there of payments going missing and credit scores being damaged because of it. It isn’t that credit card companies aren’t honest, but like any form of credit, they carry risks.

Find more information on this topic

USA News: http://money.usnews.com/money/blogs/my-money/2010/08/18/how-some-credit-cards-harm-credit-scores

CNN: http://cnn.com/2010/07/21/news/economy/Pew_card_act_study/index.htm


Post By bryanh (1,420 Posts)

Connect

Do you have a fantastic idea related to this article, but just don't have the money you need to start your own company or side-business? Get the loans you need from https://personalmoneynetwork.com to help get your new company underway, from the small loan professionals at PersonalMoneyNetwork.

PG&E to pay $70 million for pipeline tragedy

PG&E to pay $70 million for pipeline tragedy

Pacific Gas and Electric Co., a northern California utility, has agreed to pay $70 million to the California town of San Bruno for a pipeline explosion that killed eight people in 2010. Company says it’s remorseful The San Francisco-based power company’s president, Chris Johns, released a statement Monday, saying PG&E is sorry and eager to […]

Judge stabbed and deputy shot in Washington courthouse

Grays Harbor County Courthouse

Following a standoff in a Washington state county courtroom Friday, a man reportedly escaped after shooting a sheriff’s deputy in the shoulder and stabbing a judge in the neck. The man is still at large. Treachery among the tree farms The incident occurred Friday afternoon in the western Washington town of Montesano, which bills itself […]

Microraptor was one flashy little dinosaur

Microraptor fossil

A team of Chinese and American scientists have found that Microraptor, a small four winged dinosaur that went extinct about 130 million years ago, was likely black and almost certainly had glossy, iridescent feathers. Until now, the coloring of extinct creatures was a matter of pure speculation. That may no longer be the case. The […]

Autocorrected message leads to school lockdown

Homage to the Sun

Adjacent schools in Georgia were locked down for two hours Wednesday after a text message reportedly warned of a “gunman” on campus. Later, it was learned that the message was the result of a smartphone autocorrect function, attempting to “fix” the misspelled slang word “gunna.” A series of mixups A series of mixups led to […]