Handling Credit Limits Not Reporting Accurately on Credit Reports

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Handling Credit Limits Not Reporting Accurately on Credit Reports

Usage of credit accounts for 30% of a credit score. Consequently this is a very important factor in the FICO scoring model. Usage is calculated by dividing your current balance by the credit limit. For example; $500 balance on a credit card that has a$1000 limit: $500/$1000 = 50 % Usage Percentage

Affects on the FICO Score

In addition, higher utilization rates  lowers credit scores.

With no usage to report, the FICO score isn’t able to accurately calculate a score using all information that’s needed. A score will be considerably lower with a missing  usage rate

Creditors who Double Down

Furthermore many creditors refuse to report a credit limit. In other woeds they almost always mis-report by using the “High Credit” amount. High Credit is the highest amount that someone has ever has used on their account.

The companies who mis-report often claim that they are letting their “Company Secrets” out by giving out credit limits. Subsequently they argue that they don’t legally have to report the limit. Forget the fact that it may be hurting someone’s score. SMH that’s not important.

Laws Supporting Accurate Reporting

Creditors must report 100% true and accurate data. Therefore they may report a high credit in lieu of a credit limit. In other words this could easily be viewed as a violation of the law.

Moreover tot reporting the credit limit data has been a long debated topic as well. The creditors take additional positions that the reporting is not necessary. As a result they claim this is a contract between the creditor and the credit reporting agency.

A recent CDIA study released parts of the internal procedures for reporting to credit information by data furnishers to credit reporting agencies. Their study revealed a document furnished by credit reporting agencies that noted that the “Credit Limit” and High Credit field were “Required”. So much for that argument of the reporting not being necessary.

Sample Dispute Verbiage:

Please update my account #XXXX to reflect, the correct credit limit. Teh way you’re reporting this account can appear to be fraudulent. It is having a negative impact on my credit rating. I have experienced emotional and financial distress because of you’re reporting. I am sure that is not your intention, and appreciate your expeditious response.

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