Pragmatic Finance

I read an interesting article on MSN Money today about some weird stuff that hurts your credit. It talks about several things that can hurt your credit that I imagine most people don’t know about. There were a few points that I thought were worth repeating.

Some credit cards don’t report their limits. They mention the problems of Capital One here that I have discussed in the past. To summarize, when your real limit isn’t reported it can make it look like your using a lot more of your available credit than you really are. No preset spending limit cards such as those from American Express also have this problem.

Their advice about fighting it is pretty pointless as Capital One won’t change their methods unless they are forced to. Interestingly, they did mention one guy who is suing them. Hopefully others will too.

The best way to get around this is to charge up close to your limit through purchases that you already planned on doing or cashing some of those purchase checks. You can then pay it off before you get charged interest and get your high balance to report. You can also change cards to ones that do report.

The other interesting thing is that FICO scores you a little differently depending on what group you are classified in. They gave an example of a lady whose score decreased significantly because when her new card aged enough she was put into a higher credit group. The debt she had made her score drop since she was no longer one of the best of a bad group but instead near the bottom of the good group. If that’s a little confusing the article described it better. I have to say, though, that doesn’t sound very effective if the scoring system does work that way.

They also warn about the tendency for unpaid traffic tickets and library fines to be put on your credit report. Hmm, I wonder if there is a statue of limitations on these as I think I still an unpaid library late fee from high school…