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URL:  http://boards.fool.com/im-going-to-imagine-charitably-that-you-were-25586823.aspx

Subject:  Re: capital one and credit reporting Date:  6/14/2007  12:44 AM
Author:  bingocards Number:  254407 of 308881

I'm going to imagine, charitably, that you were thinking "Ahh, if I move a balance to Capital One and it doesn't get reported, then my effective utilization ratio gets lowered, allowing me to refinance at a more favorable rate, and thus pay back every penny I borrowed in a quicker timeframe than otherwise." Which won't work, because Capital One does indeed report that you are in debt. If a hypothetical person were thinking about good ways to stiff a creditor and get off scott-free, I hope that the universe has enough decency to arrange an encounter between that deadbeat and an incontinent pigeon. Or duck -- I'm not picky.

I want to expand on the ill effects of their quirky treatment of credit line, though. They report your maximum balance as your credit line. For example, my first credit card was through BoA for $2,000 at the time and I charged $450 once and typically about $250 a month. BoA reports my utilization as $250 out of $2,000 in the typical month, which means my utilization is 12.5%, which won't hurt my scores or likelihood of getting a second credit card much.

Capital One, on the other hand, would report my utilization at $250 out of $450. That makes my utilization about 55.56%, which will cause nice big red flags at most lenders. As a result, I'm far less likely to be able to get a second card, and thus I continue to be tied at the hip to Capital One.

They do other little tricks which are strongly anti-customer, too. For example, lets say you have one card with a $700 limit with them (being reported as a $400 limit), and you decide you want to move up in the world (maybe you have a computer to finance or something, or maybe you were just trying to build credit). Rather than bumping you to a $1,500 limit as a result of your good credit history with them, they'll send you a second $800 card in the mail. This has mixed results for the customer: in some cases having an extra tradeline is positive. However, because its a "toy" tradeline the effect on your FICO is markedly less, again delaying your ascent from the subprime credit ghetto, and what they are really hoping is that you go late on two cards instead of one card. Twice the fee income that way, you see.

I have been receiving Capital One solicitations since age 18. I save them in a corner for bad days, because physically tearing up something from them has never failed to put me in a good mood.
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