Up until last week, Capital One was poorly servicing their credit card customers. Rather than reporting customers’ credit limits to Equifax, Experian, and TransUnion as other credit card issuers do, Capital One would report the high-water mark.
In this situation, if one’s credit limit is $5,000, and the maximum ever charged in one billing period was $1,000, Capital One would report $1,000 as the credit limit. If this billing period was also the one in which $1,000 was charged, then your credit utilization ratio would be 100%. This hurts more due to the fact that Capital One targets customers with bad credit, and many of their customers would not qualify for other cards. A 100% usage ratio would damage the customer’s credit score to the point where they could not qualify for the best loan rates. The correct utilization ratio should have been $1,000 to $5,000, or 20%, a much more favorable figure that would not damage the credit score.
From a syndicated article about the positive change:
Capital One never disclosed this practice to its customers. Though industry critics said Capital One’s purpose was to hide its good customers from the prying eyes of competitors searching credit bureau files for attractive FICO scores, the company itself insisted that it sought instead to protect customers’ privacy.
Many customers who became aware of this practice discovered it from blogs like Consumerism Commentary and others or investigative news articles. I’d like to think that it was this reporting and the resulting complaints from customers that convinced the company to change its policy. The change will be complete by the end of the year, and customers will start to see improvements in their credit scores due to the change within the next few months.
Capital One now reporting credit limits, helping buyers [Seattle Times]
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6:05 pm (reply)
It’s about time for a positive change. I have been told by a credit bureau rep that CapOne is the odd ball out in reporting. Their method cost me 5 points on my score this month alone.
11:28 am (reply)
I wish I had known 17 years ago what a crappy company Capital One was. It would have saved me untold heartache. I paid off my balance on my account with them almost a decade ago and closed the account prior to that. Despite paying off the entire balance in full at that time [an amount less than $900], Capital One continued to try to collect monies from me that were not theirs to collect and were not due to them under any stretch of the credit lender’s imagination. I have called them and written to them numerous times. Each time I am assured that the matter will be cleared up…and it NEVER is. Their latest strategy is to send me a notice that they have “charged off” my account [which does not have any balance to collect] and welcome me back as a customer. Then they sold my “delinquent unpaid balance account” to a credit collection agency that calls several times a day clogging up my answering machine and caller id to the point of rendering the devices useless. Does anyone have any ideas of how to further deal with this mess? I have almost given up the idea of being able to buy my own home because of Capital One and their ruinious practices.
2:35 pm (reply)
Tell the collection agency to stop calling you. That’s probably the last you’ll ever hear from them. A third-party agency MUST stop calling you when you request them to do so according to the Fair Debt Collection Practices Act, though they might then sue you if they have a case. Alternatively contact the credit bureau and have them validate whatever debt the collector is trying to collect.
11:03 pm (reply)
Wow. I had no idea…I am glad they are changing that – as I have had and continue to have Capital One cards.
7:19 pm (reply)
4:37 am (reply)
Great, but now long-time customers are being forced to accept huge interest rate hikes if we want to keep the card and see this improvement hit our FICO scores. So much for my fixed rate.
1:46 pm (reply)