No Limit Credit Cards Can Hurt Your Credit Score
(CBS4) No limit credit cards sure sound tempting. But did you know these cards can damage your credit score, even if you make every payment on time?
College student Austin Kershner loves his American Express Platinum card because it has no limit. “If I want to put all of my tuition on it, I can and I don’t have to worry, you know, is it going to go through?”
But when Austin went shopping for a new car he discovered that no limit cards can come with a price.
“I found out my credit score had been affected when they pulled my credit report for my car loan. It went down about 15 points,” Kershner said.
And experts say he’s not alone.
“We’ve heard stories of credit scores falling, you know, 25-50 or more points,” says Cardratings’ Curtis Arnold.
Why is this happening?
One expert says, “The credit report doesn’t have certain information such as credit limits.” And those limits are critical. Credit bureaus use them to figure out your credit rating. But when the card has no limit, they can’t make a complete calculation.
Experts also suggest you speak with your credit card company, no matter what type of card you have, to ask if and how they report your limit. Consumers shouldn’t be fooled by the term “no limit” credit cards. Because while the cards may have no preset limit, you can’t expect to be able to charge millions.
- Source: CBS News, via CBS4
