I had an interesting talk with one of my students today about his credit report.� He has two credit cards listed from a certain company… let’s call them “Uppercase Uno”.
My response to him was, cancel these cards.
This is notable, because usually I tell my students NEVER to cancel a credit card.� However, cards from Uppercase are the exception.
See, Uppercase doesn’t report what the credit limit on an account is. Even though there is an upper limit to your credit, it doesn’t get reported on your credit report.
What this does is damages the credit utilization portion of your credit score.� Credit utilization represents 30 percent of your credit score.� It’s the ratio of a cardholder’s actual debt to their potential debt.� In other words, if a user had a $7,000 credit limit and had a balance of $3,500, that would be a 50% utiliation ratio.� The lower it is, the better your score is.
Well, when there’s no upper limit, like with Uppercase cards and some other no limit credit cards, there’s no way to calculate the utilization ratio.� Sometimes the highest balance is used, but not always.
With no upper limit, it looks like your ratio is the amount you owe v the amount you owe, or 100% utilization, which is VERY bad for both credit scoring and credit building.
Unfortunately, lenders are not required to report the available high balance on your credit cards, so there is no way to force them to do so.
What can you do?
Well, with a company like Uppercase that never reports the high balance, your best bet is to cancel the card.
With other no limit cards that do report high balances, like American Express, it’s best to run up a very high balance one month, with the intention of paying it down immediately to avoid interest.� This would result in that highest reported balance being used to calculate your ratios.
2 Responses to “No Limit Cards”
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Are you still reccomending that those of us with uppercase uno cards still get rid of them? (Sept. 1, 2007)
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Yes, as far as I’m aware this company still commits this practice.
Donna
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