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.

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