Capital One now reporting credit limits – good for FICO scoring

September 20, 2012 | By

They've changed their policy, but are they still evil?

In my second edition, I wrote about Capital One's policy of failing to provide a credit limit when they furnish account information to the bureaus. This failure could have potentially hurt a credit score, according to Craig Watts (FICO):

"All three credit bureaus organize consumer data differently, so there is no one-size-fits-all solution for FICO scores to the relatively minor problem of a tradeline missing a credit limit. Generally speaking when this situation comes up, the FICO score algorithm looks first to see if the credit report does list the high balance for that tradeline. When high balance is present, the algorithm substitutes it for the missing credit limit when calculating the tradeline's credit utilization rate. It's not a perfect solution, but we've found that it results in a more predictive score than simply ignoring the tradeline altogether. If the tradeline has neither credit limit nor high balance, then our algorithm will ignore the tradeline for certain calculations used in producing the FICO score."

Be advised that with the latest iteration of FICO, known as 8, there's been a change with how limits are calculated. If it's a revolving account, there should be a high limit or high balance on your report. If a limit is listed it will take precedence over a high balance, but if a limit isn't listed, then it will figure the score based on the high balance. If neither is reported for a revolving account, then the utilization calculation is not figured into your FICO score. These improvements are good for your FICO score, and therefore good for consumers.

Back to Capital One and their policy. Figure 6 shows where Capital One didn't report the credit limit to Equifax. When I contacted Capital One and asked it to report the limits, it refused. I asked for that refusal in writing, and Capital One provided it (Figure 7).

Capital One tradeline entry on credit report
Figure 6.

Capital One Letter
Figure 7.

The Capital One accounts shown here are my own. I disputed the credit limit entries with the Big Three in 2005, with poor results. Experian responded to the disputed accounts as "updated" yet didn't change a thing. Trans Union responded with "new information below," a term it uses for updated/changed, yet also failed to list the limits. Equifax responded with, "The creditor has verified that the high credit/limit is being reported correctly."

In 2007, Capital One reversed course and now reports credit limits. I'd like to think that people like me, in bringing a public awareness to the problem, had something to do with that. If you choose to do business with Capital One, that's your business. Just remember that they stuck it to consumers for years.

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