No. of Recommendations: 68
Hello all, this is my first post here. I was saving my first post for the day I paid off my last unsecured account (Sallie Mae student loan, $5,300), but I think my experience with Capital One needs to be told.

If you are applying for or already have a credit card with Capital One, read on. You may be seriously getting screwed financially because of their unethical practices. Hopefully this is not a repost (I did a search and didn't find anything on this).

After having sent my final payment to all my credit cards last month and doing my first Happy Dance to the original "Tequila" while doing my best Pee Wee Herman impression, I enthusiastically went to check my credit score through Equifax's Credit Expert service today. To my dismay, my score was 40 points lower than last month! What the #*@$%*? My score has been gradually increasing as I've been paying off my cards these past seven months (almost $8,000 total). Why did it go down 40 points after paying them off completely?? As you Fools know, 40 points is no joke and can make a huge $$$ diference over the life or a mortgage.

After almost having a stroke, I noticed that my Capital One card was still showing last month's balance of $90 (I usually don't have a balance on that card). Fine, but the credit limit for that card is $500, so I'm only at 18% of my balance-to-limit ratio, which is lower than last month, so why did my score go down? But then I noticed something odd; the credit limit for the Capital One account was not being reported to the credit bureau (unlike all my other cards). Only the highest limit was being reported (highest balance I've ever carried on the credit card), which was $151. Therefore, Equifax was reading the $151 as the credit limit instead of the actual $500. This puts me at a 60% balance-to-limit ratio!

After having a very frustrating conversation with a Capital One service rep who could barely speak English (darn outsourcing) and kept insisting that a full-scale investigation be launched on the $90 balance (that's not the issue, Sahid!), I called back and talked to a very polite and helpful rep who informed me that Capital One's current policy is to NOT report credit limits but that they are aware of the "inconvenience" that it causes and are going to change their policy soon. He then suggested what I had already thought of; max out my card by depositing one of their checks into my bank account and then paying off the card immediately with that same money, therefore raising my highest limit - and therefore my perceived credit limit - from $151 to $500. Superb, I thought. Just an honest mistake (sort of) on their part.

But then, not even 15 minutes later, I stop at Barnes and Noble and, of the hundreds of thousands of books they have in stock, I pick up a new 350 page book about credit ("Credit Scores and Credit Reports", by Evan Hendricks), open it up and almost instantly I'm on a page about Capital One. I don't know what the odds are of that happening, but if that book was a lottery ticket I'm sure I'd be a millionaire right now. According to the author, Capital One deliberately fails to report credit limits in order to lower their customers credit scores and therefore discourage competitors from contacting Capital One's customers with more competitive credit card offers! What?!? You mean to tell me that this company knowingly tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc, just so they could make a couple extra bucks off me??? I think that's sufficient grounds for legal action against them.

Oh, and another thing. Even if I keep my Capital One balance at zero, my credit score would still be lower than it should be. One of the factors that negatively affect my score according to Equifax is that my credit limits are low (refering obviously to the $151) and it shows that lenders don't trust me with high limits, therefore reducing my creditworthines or something lame like that. So who knows how many more points beyond those 40 Capital One is really costing me.

Sorry for the long rant, and thanks for listening. Hopefully I'm returning the favor and helping a few Fools in here as many of you have helped me in the past :-)

Cheers,

Javi
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No. of Recommendations: 27
I really hate to do this to a new poster, but there are some points that need to be addressed.

So who knows how many more points beyond those 40 Capital One is really costing me.

Who cares? When you play the debt ratio game or the FICO game YOU are the one who chooses to play. You don't have to have CC debt to qualify for a decent mortgage.

As you Fools know, 40 points is no joke and can make a huge $$$ diference over the life or a mortgage.

Really? is there any difference between 740 and 780? A good FICO score is something that happens, not something that is made. If it is made, it is not won't be good after you over-extend yourself. A FICO score should be irrelevant.

I think that's sufficient grounds for legal action against them.

I think that you should switch to decaf.

The information that you gave is interesting, but I would not get so bent out of shape over it.

Fred
who is not a fan of CapitalOne or any CC company.





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No. of Recommendations: 5
According to the author, Capital One deliberately fails to report credit limits in order to lower their customers credit scores and therefore discourage competitors from contacting Capital One's customers with more competitive credit card offers!

So having a Cap One card means that I'm not supposed to be getting the three and four offers a week that fill up my mailbox?

It's not working. They still pour in, and I've had the card for years.

I don't bother checking my FICO; I don't have any reason to take out any loans at the moment. But having a long, steady record of paying my bills on time seems to have taken care of the problem. I checked once, and my rating was excellent, and I do check my credit reports to make sure there are no errors on them. So I'm not worried.

But relying on one solitary card to carry you into credit heaven is a bit risky.

Do you have any others? Usually creditors look at more than a single credit card to decide whether or not you're credit worthy. So if you had three or four cards, with a higher limit than $500.00, it would probably be better. You don't have to use them. Mine mostly sit around being forgotten and unloved.

Nancy
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No. of Recommendations: 1
That is one of the reasons I closed my Capital One account-I didnt like the fact that my high balance was a fraction of my credit limit, and that since my balance was usually about the same each month (though I paid it off in full) it always looked like it was maxed out.
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All credit card companies are evil, although from your post Capital One sounds more so than others.

But buckmizer has a point: they may have set the rules, but WE decide to play the game by carrying a balance. Don't like the rules any more? By all means, post here to warn others, but then close your account and walk away.

Oh, and one warning about using those cash advance checks to max out the card: IIRC, most companies do NOT provide a grace period for repaying those checks, so the moment you deposit the check it will start generating interest until the moment you pay it off. There will likely be a lag between the time the funds are deposited into your account and the time Capital One credits your repayment to your account, and you'll owe the interest on those days.

Also, any payments you make will pay off the LOWEST interest rate first. Since the rate on those checks is usually much higher than normal purchases, if you already have a balance on your card then using those checks is a very bad idea.

Sounds like they've stacked the rules in their favor, so the only real way to win is not to play. If you just paid off the debt, CONGRATS, burn the damn card and don't look back. Lord knows I wish I was to that point, Capital One's trickery notwithstanding.

Seth
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No. of Recommendations: 11
All credit card companies are evil

They are all business which can choose to do business with or not.

Sounds like they've stacked the rules in their favor, so the only real way to win is not to play.

I win by charging everything to a card that gives me cash back and paying it off every month.

I was talking to a friend earlier about posts. I mentioned I could write one complaining about credit card companies giving my 20 year old college student son a $12K credit limit and that I could do it to get lots of recs. The fact is he did get the card but if he screws up, it's his fault and not the company's. He's had access to a credit card since about age 15 and should well understand the ramifications. We talk about finances at dinner to the point that there can be no ignorance left. He got the card to save 10% on his first purchase and to get a card on his own.

rad
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No. of Recommendations: 8
Also, if they are reporting the credit limit incorrectly, you can dispute it with the credit agencies. I once had a credit card (not CapOne) do that the same thing to me... I charged and paid off about $400 each month, and it showed a limit of $400 maxed out, when in fact the limit was $10000 or so. I disputed... it was fixed.

LAL
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No. of Recommendations: 8
Who cares? When you play the debt ratio game or the FICO game YOU are the one who chooses to play. You don't have to have CC debt to qualify for a decent mortgage.

Who cares? I do! I think you missed the point by a landslide. Let me present a shortened version of this issue for you:
Harry has a Cap1 card with a $10,000 limit and a zero balance. Harry's other cards all carry zero balances. Harry buys $20 worth of gas with his Cap1 one night because he had no cash with him. Harry pays off the $20 balance online two days later, before his statement is even mailed. But the day before he pays, Cap1 reports his account to the CRAs as maxed out to his measly $20 limit. Harry's credit is damaged because 1) his debt ratio is at 100%, and 2) his credit limit is low.

Did Harry "play the game"? No. In fact, that's as conservative as credit card usage can get, and yet under Capital One's tactics it can still damage your credit. Do you think that is fair, especially when it is done on deriberately? No. Remember, Capital One is trying to damage your credit on purpose, wether you're a responsible user or not, wether you choose to "play the game" or not, wether you pay your bills every month or not, wether you have a zero balance or not. Or are you saying that everyone who comes near a credit card deserves to be penalized for just "playing the game"?

And where did I mention that I'm carrying cc debt (I'm not) in order to qualify for a mortgage (I already have one)?

Really? is there any difference between 740 and 780? A good FICO score is something that happens, not something that is made. If it is made, it is not won't be good after you over-extend yourself. A FICO score should be irrelevant.

Maybe there's no difference between 740 and 780, but there is a difference between, say, 650 and 690. But wait, it's not only 40 points. Harry is also being affected by the fact that his credit limit is too low. Let's be conservative and say that only affects him by 10 points, for a total of 50. Is there a difference between 650 and 700? YES. Is there a diffenece between 600 and 650? Only wether you get a decent mortgage or no mortgage at all. Yeap, sounds irrevelant to me. Or are you saying that because my credit is not perfect then I have no right to defend myself when I'm being taken advantage of?

(I think that's sufficient grounds for legal action against them.)
I think that you should switch to decaf.

No way! I can't function without my morning cup. Don't worry, I'm not going to sue. But how much do you want to bet that there's a class action suit brewing somewhere already? So yeah, I think there is a case there.
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Or are you saying that everyone who comes near a credit card deserves to be penalized for just "playing the game"?


Not penalized, necessarily. But if you choose to do business with a credit card company, you should be aware that the credit card company is not your friend. They want to make money off you, any way they can. So you have to be super-careful to read every bit of the fine print in each and every statement in order to avoid traps like this. Some credit card companies are more evil than others, and you'll do yourself a favor if you do your homework and avoid the worst ones -- Like Cap One.
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No. of Recommendations: 4
Harry has a Cap1 card with a $10,000 limit and a zero balance. Harry's other cards all carry zero balances. Harry buys $20 worth of gas with his Cap1 one night because he had no cash with him. Harry pays off the $20 balance online two days later, before his statement is even mailed. But the day before he pays, Cap1 reports his account to the CRAs as maxed out to his measly $20 limit. Harry's credit is damaged because 1) his debt ratio is at 100%, and 2) his credit limit is low.

Wrong.

I just pulled out copies of my three credit reports. As you said, Cap One does not report the credit limit. Trans Union also didn't list my Filene's credit limit, and Equifax missed almost all my credit limits.

But, I am not being reported as maxed out. And neither are you.

There is a place on the listing for each card's credit limit. Some have the amount entered, some don't. Experian puts N/A in the space.

So you are not being reported as having a maximum credit limit of $151. Cap One doesn't list the information, and any credit company that deals with these reports a lot of the time will be aware of that. The reports do list a high amount for the year, and that's about it.

I have a $10,000 line of credit from Cap One. Not having that information available sure didn't stop AT&T from offering me another $10,000.

Nancy
now have some nice decaf and do your deep breathing exercises.
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No. of Recommendations: 0
A low fico score can be very costly. A buddy of mine picked up his lifetime dream car, a lexus RX330, yesterday. Since he made the mistake of co-signing a loan for his stepdaughter, and she made two payments late last year, his score is 674. That made his payments, according to the Lexus dealer, $30/month higher. If he had been over 700, he would have saved about $1400 over the 48 month term of the lease.
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You mean to tell me that this company knowingly tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc, just so they could make a couple extra bucks off me???

40 points should not affect you THAT much. If it does, then you were on the brink of bad credit anyway.

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Wrong.

I just pulled out copies of my three credit reports. As you said, Cap One does not report the credit limit. Trans Union also didn't list my Filene's credit limit, and Equifax missed almost all my credit limits.

But, I am not being reported as maxed out. And neither are you.

There is a place on the listing for each card's credit limit. Some have the amount entered, some don't. Experian puts N/A in the space.

So you are not being reported as having a maximum credit limit of $151. Cap One doesn't list the information, and any credit company that deals with these reports a lot of the time will be aware of that. The reports do list a high amount for the year, and that's about it


Wrong.

Three reasons why:

1) I've been religiously checking my Equifax credit report monthly for the past year or so. Last month when my Cap One was at zero and my other cards around $800 I was under 20% debt ratio. I know this because Equifax's Credit Expert service has a scale that tells me at what ratio I am at. This month, all my other cards are at zero and my Cap One is at $90, and yet that same Equifax scale shows that I am over 50% ratio! The only balance that went up from last month is my Cap One. $90 of $500 is NOT over 50% ratio. But $90 of $151 is 60% ratio. So not only does the math adds up, but also Equifax itself is telling me that I am maxed out (or over 50% ratio, the highest level on the scale). So yes, I am being reported as maxed out.

2) The book I mentioned said so. I'm going to B&N tonight to buy it and I'll post that section here if you want. It said that Capital One is known for doing that in order to deter competitors from contacting their clients, and that they have been getting a lot of heat lately for it. So apparently I'm not the only one complaining. The example the book gave was basically the same as my case.

3) The service rep from Cap One himself confirmed that is the reason that my credit was affected. He also came up with the max-out-your-card-momentarily solution that I described. When the company itself admits to this, what more proof do you need? The only difference is that the rep didn't mention that it is done on purpose.

It's clear as day. Even if it never happened to me, #2 and #3 are reason enough to believe it. Just because it isn't affecting you it doesn't mean that it doesn't affect me. Which makes me wonder how do you know it is not affecting you? Did you know what your score was before you carried a balance on your Cap One for the first time?

Regards,

Javi
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No. of Recommendations: 5
Enough.

We all are trying to get out of debt here, and instead of arguing about a book that we all could read *if we wanted to*, just relate the name of the book, and quit the hyperbolizing.

And checking your credit report monthly, well..I'm glad you have money that you can spread around...can I have some of what you spend on those reports?

Ignored now,
Heather
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No. of Recommendations: 6
Which makes me wonder how do you know it is not affecting you? Did you know what your score was before you carried a balance on your Cap One for the first time?

The last time I checked my score was in 2001. I'd had the Cap One card for a couple of years at that point.

My score was 821.

The book I mentioned said so

I have a bridge for you to buy. You'll love it. Great view of Brooklyn.

I've been religiously checking my Equifax credit report monthly for the past year or so. Last month when my Cap One was at zero and my other cards around $800 I was under 20% debt ratio. I know this because Equifax's Credit Expert service has a scale that tells me at what ratio I am at. This month, all my other cards are at zero and my Cap One is at $90, and yet that same Equifax scale shows that I am over 50% ratio! The only balance that went up from last month is my Cap One. $90 of $500 is NOT over 50% ratio. But $90 of $151 is 60% ratio. So not only does the math adds up, but also Equifax itself is telling me that I am maxed out (or over 50% ratio, the highest level on the scale).

Did you bother looking at Trans Union or Experian?

If you have credit limits on several cards then the Equifax computer system is screwed up. It's supposed to add together ALL your credit limits, then add ALL your debts, then calculate the ratio. That's what the score is about. Your total credit limit compared to your total debt.

If it's only running one card, then they need a new person to program their computer.

You need to discuss this with Equifax. Not Cap One.

Nancy
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No. of Recommendations: 14
OP,

Yikes! I'm surprised you're getting such a hostile reception on the "consumer credit and credit cards board." IMHO, I think your info was appropriate for this board and I appreciate the heads up. FICO issues have as much to do with consumer credit as credit card balances (or lack of balances). I will add that I've heard some Citibank Aadvantage cards don't report credit limits either; although I'm not postitive since I don't carry one of those.

Tamsin
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No. of Recommendations: 28
We all are trying to get out of debt here, and instead of arguing about a book that we all could read *if we wanted to*, just relate the name of the book, and quit the hyperbolizing.

I did mention it: "Credit Scores and Credit Reports", by Evan Hendricks. It was on my first post.

And checking your credit report monthly, well..I'm glad you have money that you can spread around...can I have some of what you spend on those reports?

I paid a yearly fee that lets me check my Equifax report as many times I want at no extra charge, and I am so glad that I did. I'm not sure what that has to do with anything here though, other than just being a cheap shot. And no, you can't have my money.

--------------------------------------------------------------------


(The book I mentioned said so)
I have a bridge for you to buy. You'll love it. Great view of Brooklyn.


I saw that one coming, and with good reason. But if the book is not proof enough, is Equifax telling me that my credit is maxed out and Cap One telling me that their reporting antics is the reason it happened proof enough? Please don't pick on my weakest point and choose to ignore the others if you're going to argue.

Did you bother looking at Trans Union or Experian?

Yes but I don't have their scores from last month, so I can't tell if the Cap One charge affected those scores this month. The most recent scores I have are from a few months ago when all my cards were above 50% ratio.

If you have credit limits on several cards then the Equifax computer system is screwed up. It's supposed to add together ALL your credit limits, then add ALL your debts, then calculate the ratio. That's what the score is about. Your total credit limit compared to your total debt.

Good point, I was wondering about that. That's probably why it isn't affecting you (BTW, congrats on that awesome score). However, Cap One is currently my only open card (not for long!), so if my Cap One is maxed out, then I'm all maxed out! Funny thing is how the other cards affected my score negatively when they were closed but had a balance, and now that they are paid off they suddenly have no pull :-/ Again, did you know your score before you charged your Cap One for the first time? How do you know it wasn't higher (of course, it probably wouldn't affect you anyway because you have other cards and the ratio is calculated collectively like you said, but you get my point...)

Anyway, I don't know what else to say to prove that this is happening without repeating myself, so I'm done defending my position. Frankly, I'm dissapointed that I presented a strong argument and it's being nit picked and torn apart on a forum that's supposed to help people manage their money, especially with frivolous arguments. I'm convinced that Cap One is tarnishing its customers' credit on purpose from my own experience, from doing some research, and because Capital One itself told me so!

Cheers,

Javi





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If you have credit limits on several cards then the Equifax computer system is screwed up. It's supposed to add together ALL your credit limits, then add ALL your debts, then calculate the ratio. That's what the score is about. Your total credit limit compared to your total debt.

FICO uses both percentages, total percentage of credit used and the percentage on individual cards. High percentage on individual cards would lower the FICO score, especially if it is the only credit card.

Discover also does not report credit limit. I do not remember the exact comment on the credit report, but at least it was clear that the amount reported was recent high usage and not the credit limit.

CapOne has a shaky history. Predatory practices are not a surprise. This is the first time I have heard of this one. Sub-prime lenders have a history of not reporting good credit information to prevent customers from obtaining better credit terms.

I keep three credit cards and do not carry balances. Since all have a long history, any one is expendible. It is nice to have the freedom to tell a credit card company where to put their account conditions or 'change in terms.'

Debra

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rad,

I was talking to a friend earlier about posts. I mentioned I could write one complaining about credit card companies giving my 20 year old college student son a $12K credit limit and that I could do it to get lots of recs. The fact is he did get the card but if he screws up, it's his fault and not the company's.

Come on, who are you kidding? In this day and age there is no accountability for one's actions, it is always someone else's fault. ;-D

dt
truly admires rad and her DH for the way they have raised their children
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Javi,

This month, all my other cards are at zero and my Cap One is at $90, and yet that same Equifax scale shows that I am over 50% ratio!

Is this ratio for this card alone or combined across all of your cards? If this is for all cards, then you also have a problem with the other cards because they must not be listing any available credit if your ratio is still near 50%.

If it is just this one card, file a dispute if it bothers you that much to have the credit limit improperly listed. FWIW, I thought Nancy was correct with her explanation. I don't have my credit report handy to compare but to the best of my knowledge, that is how mine worked as well.

The book I mentioned said so.

I don't know about you but I have seen plenty of books on various topics with inaccurate information. Heck, if I tried to follow the examples in any of my programming books, I wouldn't be able to program Hello World! because many books have incorrect sample code. Just because it is in a book does not make it true.

Good luck to you in getting this situation resolved to your satisfaction.

dt
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Good luck to you in getting this situation resolved to your satisfaction.

The key words being "to your satisfaction." Good writing, dt.

Fred
<rollingeyes>who just must be clueless "by a landslide."</rollingeyes>
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A buddy of mine picked up his lifetime dream car, a lexus RX330, yesterday.

Isn't it interesting that a vehicle only out for a couple of years can be someone's "lifetime" dream car?

xtn
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I don't need any new credit cards, but Capital One is at the bottom of my list thanks to their onslaught of annoying advertisements.
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According to the author, Capital One deliberately fails to report credit limits in order to lower their customers credit scores and therefore discourage competitors from contacting Capital One's customers with more competitive credit card offers!

Yes, the bolding is mine.

The author is wrong

The policy is not designed to screw customers, but to protect our credit policy from competitors. Yes, we have had many debates over whether or not this is necessary, and that is probably why the rep mentioned that the policy might change, but I promise we are not out to get you.
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Anyway, I don't know what else to say to prove that this is happening without repeating myself, so I'm done defending my position. Frankly, I'm dissapointed that I presented a strong argument and it's being nit picked and torn apart on a forum that's supposed to help people manage their money, especially with frivolous arguments.

Javi -

Yes, you have gotten a few people who aren't smart enough to recognize the value of your post. Trust me, although we havn't responded, there are a couple hundred of us who have read it and appreciate the information.

We need this type of observation posted to this board. Of course, you will probably always get some grief about ANYTHING you post at all. Please don't let that stop you from posting. Don't take it personally.

I for one hadn't realized that this is going on. I just looke back over my credit reports pulled a couple of months ago and I now realize that my CapOne card AND my Discover card report only a 'high balance' and not actually an accurate credit limit.

xtn
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Cap One doesn't list the information, and any credit company that deals with these reports a lot of the time will be aware of that.

Thank you, good point. Most lenders are aware that COF (and other CCs) don't report the full credit limit. They take that into consideration.
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The policy is not designed to screw customers, but to protect our credit policy from competitors. Yes, we have had many debates over whether or not this is necessary, and that is probably why the rep mentioned that the policy might change, but I promise we are not out to get you.

FWIW, this actually sounds legit to me. Back when I was interviewing for jobs after getting my Ph.D. (in mathematics, since it is relevant here) I had an interview with Cap One. They were doing some very heavy-duty data-mining research into trying to predict which 'sub-prime' customers were more credit-worthy than the traditional metrics (e.g. FICO scores) would tend to indicate.

If they let out too much information, it could be a way for other credit card companies to piggy-back on their research and investment for free.

--B+C
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I've been religiously checking my Equifax credit report monthly for the past year or so. Last month when my Cap One was at zero and my other cards around $800 I was under 20% debt ratio. I know this because Equifax's Credit Expert service has a scale that tells me at what ratio I am at. This month, all my other cards are at zero and my Cap One is at $90, and yet that same Equifax scale shows that I am over 50% ratio! The only balance that went up from last month is my Cap One. $90 of $500 is NOT over 50% ratio. But $90 of $151 is 60% ratio. So not only does the math adds up, but also Equifax itself is telling me that I am maxed out (or over 50% ratio, the highest level on the scale). So yes, I am being reported as maxed out.


No, you are not being reported as maxed out to any lenders. Yes, Equifax's simple Credit Expert that they love to make money off of people like you screws up and overestimates because it can't tell the difference between high credit and credit limit, but the rest of the lending world can tell the difference.

2) The book I mentioned said so. I'm going to B&N tonight to buy it and I'll post that section here if you want. It said that Capital One is known for doing that in order to deter competitors from contacting their clients, and that they have been getting a lot of heat lately for it. So apparently I'm not the only one complaining. The example the book gave was basically the same as my case.


Again, the author is making wrong assumptions. Did they also mention the other credit card companies that do the same thing? We aren't the only one, but we are the one who most gets slammed for trying to protect our secrets from competitors.
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Most lenders are aware that COF (and other CCs) don't report the full credit limit. They take that into consideration.

Don't count on that. MOST lenders just look at the score and make a decision on that. We know FICO just takes the little number and divides it by the big number to determine your percentage of available credit used. The problem boils down to the fact that if the big number reported is less than your actual credit limit, then the resulting percentage is higher than your actual percentage of available credit used.

xtn
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We aren't the only one, but we are the one who most gets slammed for trying to protect our secrets from competitors.

Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets.

xtn
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Cap One is currently my only open card (not for long!),

Wait, wait, wait, wait, wait.

You only have the one card, you plan to close it soon, and you think your FICO is going to get better?!?!?!?!?!

Please pass around whatever you are smoking because I would love a hit of that!
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Don't count on that. MOST lenders just look at the score and make a decision on that. We know FICO just takes the little number and divides it by the big number to determine your percentage of available credit used. The problem boils down to the fact that if the big number reported is less than your actual credit limit, then the resulting percentage is higher than your actual percentage of available credit used.

You might keep in mind that the score he's complaining about is not his actual FICO score. It's Equifax's approximation of their estimate of his FICO score, run through their own computer, and not the Fair, Isaac model.

So would-be lenders are going to be looking at a totally different number anyway.

Nancy
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Good writing, dt.

Now there is something I have never been accused of before! :-)

dt
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Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets.

http://boards.fool.com/Message.asp?mid=21225472

--B+C, not in the mood to repeat himself
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You might keep in mind that the score he's complaining about is not his actual FICO score. It's Equifax's approximation of their estimate of his FICO score, run through their own computer, and not the Fair, Isaac model.

So would-be lenders are going to be looking at a totally different number anyway.

Nancy


Dear Nancy,

You obviously do not have the clearest understanding of Fair, Isaac's products. You see, there isn't actually one FICO score. There are many. Fair, Isaac is in the following business: They create scoring models for their clients. Their clients include the big three CRAs as well as others.

The big three CRAs use scoring models provided by Fair, Isaac. They may contain slightly different formulas, but are pretty much the same. Experian calls their score the "Fair, Isaac Model score," Equifax calls their score the, "Beacon score," and Transunion calls their score the, "New Emperica score." All three of them get their mathmatical models from Fair, Isaac.

So what exactly do you mean when you say it's "...Equifax's approximation of their estimate of his FICO score...?" What mathmatical model are you calling his FICO score, and why is Equifax's Beacon score not representative of that score?

What totally different number are would-be lenders going to be looking at? They're going to be looking at at least one of, and possible two or all three of the big CRAs reports/scores. You think they have some source of "The Real FICO that CRAs only approximate?" That's just silly.

Sure, many lenders have their own proprietary "FICO" model that they themselves have hired Fair, Isaac to provide, and that may or may not significantly differ from the ones the CRAs use. These "private" scoring models may take into account additional information such as your income, time on job, or whatever other information that lender gets from you on an application. Typically their models plug in one of the CRAs score, and then modify it with additional info, and then spit out an adjusted score for the lender to base his decision on.

But typically when someone say, "my FICO score," they are talking about one of their scores as reported by a major CRA.

xtn

PS - Why would Equifax estimate his score, then approximate that estimate? That doesn't make logical sense.

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http://boards.fool.com/Message.asp?mid=21225472

--B+C, not in the mood to repeat himself


Okay, that post says:

FWIW, this actually sounds legit to me. Back when I was interviewing for jobs after getting my Ph.D. (in mathematics, since it is relevant here) I had an interview with Cap One. They were doing some very heavy-duty data-mining research into trying to predict which 'sub-prime' customers were more credit-worthy than the traditional metrics (e.g. FICO scores) would tend to indicate.

If they let out too much information, it could be a way for other credit card companies to piggy-back on their research and investment for free.


So I'll repeat MYself. Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets

That post you linked to doesn't explain this at all. It says that it COULD. But it doesn't explain HOW. In other word: HOW can a consumer's credit limit somehow give away CapOne's proprietary research?

xtn

PS - Repeating the statement again isn't an explanation.
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The lexus rx series has been out for longer than a couple years. Maybe I exaggerated more than a bit. But I've known Mike for ten years and I've never seen him near that excited.
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So I'll repeat MYself. Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets

That post you linked to doesn't explain this at all. It says that it COULD. But it doesn't explain HOW. In other word: HOW can a consumer's credit limit somehow give away CapOne's proprietary research?


If I give someone a large credit line that isn't obviously justified by well-known metrics, then that means that I am using a model that doesn't rely exclusively on those metrics. You can look at the fact that I have given a large line of credit, deduce that my research indicates that said person is more creditworthy than they otherwise appear to be and use the fruits of my labor without having to make the models yourself.

PS - Repeating the statement again isn't an explanation.

I wa sassuming you could connect the dots yourself.

--B+C
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Windowseat,

You wrote, You might keep in mind that the score he's complaining about is not his actual FICO score. It's Equifax's approximation of their estimate of his FICO score, run through their own computer, and not the Fair, Isaac model.

So would-be lenders are going to be looking at a totally different number anyway.


I personally don't see how that makes any difference. As far as I can tell FICO relies heavily on the available credit reported, just as does the competition's scoring models. The fact that they both come up separately with a different number doesn't mean they won't both be as heavily affected by failing to report.

I'm afraid I'm with xtn ... as well as JaviAir, though I'm not as excited about it as he is. I think the practice is dirty and underhanded. To me it's morally equivilent to lying on someone's credit report.

Also, I don't see how the terms of your contract with a credit card company can be considered proprietary information. Certainly it's not if you don't agree to it as part of the contract ... and the credit limit is part of the contract.

In any case, I've felt that Capital One was an under-handed sub-prime lender for quite a number of years. This thread doesn't change my opinion of them one bit. For the most part, offers from CapOne go straight into the shreader unread.

- Joel
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So I'll repeat MYself. Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets

Generally speaking, one could argue that a person that has been responsible with their credit will have higher limits than those with problematic credit history.

As such, when Credit Card X accurately reports the credit limit as $50,000 and another credit card company sees that information, the common assumption would be that the person has been responsible with their credit. However, if Credit Card X reported the limit as the highest balance, let's say $1100, then another credit card company cannot make the same assumptions.

Granted these assumptions should not preclude a company from doing their own due diligence but it could be used as a filter to reduce the volume of their work.

Of course, these are broad generalizations and I am sure you can pick it apart until you are blue in the face, but that is my thought of how the credit limit can influence the competition.

dt
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Joel,

I'm afraid I'm with xtn ... as well as JaviAir, though I'm not as excited about it as he is. I think the practice is dirty and underhanded. To me it's morally equivilent to lying on someone's credit report.

I may be wrong and I don't have a credit report to confirm one way or the other but I thought there was a notation that the number was using the Highest Balance as opposed to the Credit Limit.

If anyone has a credit report handy, can you confirm or deny that? I'll have to check tonight when I get home.

dt
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We need this type of observation posted to this board. Of course, you will probably always get some grief about ANYTHING you post at all. Please don't let that stop you from posting. Don't take it personally.

I for one hadn't realized that this is going on. I just looke back over my credit reports pulled a couple of months ago and I now realize that my CapOne card AND my Discover card report only a 'high balance' and not actually an accurate credit limit.


And if it had been kept to the fact that yes, COF and some other credit card companies choose not to report the credit limit that would be a beneficial post. I am sure many people were not aware of this.

But to claim that the goal is to screw the customers and prevent them from getting other offers is false. And the Customer rep never said that. They did say the high limit is not reported, but the OP never said the service rep said it was to screw customers. Some book said that.

The book is wrong, but the OP bought the message hook, line, and sinker, and is now going to go buy the book.

Facts I am fine with. Wild accusations need to be called out for the garbage they are.
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I for one hadn't realized that this is going on. I just looke back over my credit reports pulled a couple of months ago and I now realize that my CapOne card AND my Discover card report only a 'high balance' and not actually an accurate credit limit.

My closed Capitol One shows limits, but my open Discover account does not show a limit on only Equifax. The high balance is used if there is no limit. So charging a CC to the limit and waiting a billing cycle will work just as well.

jk
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Don't count on that. MOST lenders just look at the score and make a decision on that. We know FICO just takes the little number and divides it by the big number to determine your percentage of available credit used. The problem boils down to the fact that if the big number reported is less than your actual credit limit, then the resulting percentage is higher than your actual percentage of available credit used.


Some, yes. But, as I learned from personal experience, the FICO score sold to the consumer does not match what is sold to the lenders.

When I went for my mortgage I pulled the reports and got the scores. When my lender told me the scores she pulled, we compared reports. The details were very similar, but the scores were very different. She called up the company she pulls reports from and they explained that the formula used to create FICOs sold to individuals is simplified and is an approximation. The official formula is much more complicated and accurate.
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Please explain how accurate reporting of consumers' credit limits can in any way provide clues to your competition about your secrets.


The theory is that if they can see the credit of the person, and see what line we chose to give them, they can revers engineer the credit policy we use to determine those lines.
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The big three CRAs use scoring models provided by Fair, Isaac. They may contain slightly different formulas, but are pretty much the same. Experian calls their score the "Fair, Isaac Model score," Equifax calls their score the, "Beacon score," and Transunion calls their score the, "New Emperica score." All three of them get their mathmatical models from Fair, Isaac.


And in my recent dealings with getting a mortgage, we were told the bureaus are selling the "Next Gen FICO" to the consumer, but the lenders are using the Beacon/Empirica/etc because that is what Fannie Mae still uses.

So there still can be a significant difference between what the consumer sees and what the lender sees.
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The theory is that if they can see the credit of the person, and see what line we chose to give them, they can revers engineer the credit policy we use to determine those lines.

That would, I might add, be much easier, cheaper, and less time-consuming than developing the policy in the first place.

--B+C
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Some, yes. But, as I learned from personal experience, the FICO score sold to the consumer does not match what is sold to the lenders.

When I went for my mortgage I pulled the reports and got the scores. When my lender told me the scores she pulled, we compared reports. The details were very similar, but the scores were very different. She called up the company she pulls reports from and they explained that the formula used to create FICOs sold to individuals is simplified and is an approximation. The official formula is much more complicated and accurate.


I learned from personal experience that this is not generally the case. When shopping for a mortgage a few months ago I was given copies of my reports pulled through FOUR different providers. I pulled my own reports by ordering them each directly from the big three CRAs, as well as online through myfico.com. Of the four I was given by providers, two of them had scores that matched EXACTLY with the scores I got directly, and with the scores from myfico.com. They were all pulled on the same day within three hours. The other two were pulled on different days, and the scores varied slightly.

Now SOME providers may use third-party reports without CRA provided scores, which then provide their own third-party score as a way to cut costs. And SOME online report sources may do the same thing.

However the third-party reports I was given, as well as the directly ordered consumer reports AND the online myfico.com reports, all pulled on the same day, matched exactly.

xtn
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And in my recent dealings with getting a mortgage, we were told the bureaus are selling the "Next Gen FICO" to the consumer, but the lenders are using the Beacon/Empirica/etc because that is what Fannie Mae still uses.

So there still can be a significant difference between what the consumer sees and what the lender sees.


When I ordered my credit reports with scores directly from the big three CRAs they contained the exact scores as shown on my reports that mortgage providers gave me. They were pulled on the same day, within three hours of eachother. Now if a mortgage provider uses a third-party credit report vendor, that vendor MIGHT pull reports without scores to cut costs, add its own proprietary score, and furnish it to the mortgage provider that way.

Regardless of what you were told, when a report is pulled from one of the big three CRAs, WITH a score, they provide the same score to everyone, lendors, consumers, or whoever.

xtn
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PS - Repeating the statement again isn't an explanation.

I wa sassuming you could connect the dots yourself.

--B+C


Fair enough, but that doesn't explain why you said you weren't in the mood to repeat yourself. You never gave any explanation in the first place.

xtn
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I learned from personal experience that this is not generally the case.

Ok, I have one example where they differed greatly. You have one example where they didn't.

How can you say "generally" with only one anecdote?

I was pointing out they could be different as evidenced by my experience. My lender sounded like she had seen the same thing before too.
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Regardless of what you were told, when a report is pulled from one of the big three CRAs, WITH a score, they provide the same score to everyone, lendors, consumers, or whoever.


No. Each of the bureau has at least two different FICO products presently. "Empirica" and "Beacon" are the old ones from two of the bureaus (I forget which goes with which right now)

Fair Issac has come up with a new formula that is supposed to be better at differentiating at the high and low ends of the spectrum. That one is being called "Next Gen FICO" by all three bureaus. (I know this, the company I work for is still deciding which FICO to use)

As consumers, you get the "Next Gen FICO" model run against whatever data is available. If you get each one from a bureau, they run it against the data they have on you, so that is why each of the three can provide a different score (if one is missing a few accounts, or one has an error)

If a third party is pulling all the data together and generating a single score (rather than reporting the three scores) then they are compiling all that data and can come up with a slightly different score.

Lenders have the right to choose whether they want the old Empirica/Beacon/etc FICO, or the Next Gen FICO. Most mortgage lenders are still going with the older one because Fanny Mae still uses it. Consumers don't get a choice. You are being sold next Gen FICO. It may or may not match up.
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Ok, I have one example where they differed greatly. You have one example where they didn't.

How can you say "generally" with only one anecdote?

I was pointing out they could be different as evidenced by my experience. My lender sounded like she had seen the same thing before too.


Well, I have two reports from lenders that were exact, the two that had the same pull dates. And two that were within five points on all counts, pulled a week later.

If your lender DOES utilize a third-party report wherein that third-party has included their own proprietary score instead of paying for and passing on the actual score available from the CRAs as a matter of cost saving policy, AND/OR the customer has obtained their own scores via a third-party online provider doing the same thing, then I can definitely imagine a disparity between the scores she sees and those brought in by her customer. I can easily imagine this happening on a regular basis.

If you remove from the equation any third-party calculated scores, you are left with my point. The big three CRAs do NOT provide different scores to lenders than they do to consumers.

xtn
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No. Each of the bureau has at least two different FICO products presently. "Empirica" and "Beacon" are the old ones from two of the bureaus (I forget which goes with which right now)

Fair Issac has come up with a new formula that is supposed to be better at differentiating at the high and low ends of the spectrum. That one is being called "Next Gen FICO" by all three bureaus. (I know this, the company I work for is still deciding which FICO to use)

As consumers, you get the "Next Gen FICO" model run against whatever data is available. If you get each one from a bureau, they run it against the data they have on you, so that is why each of the three can provide a different score (if one is missing a few accounts, or one has an error)

If a third party is pulling all the data together and generating a single score (rather than reporting the three scores) then they are compiling all that data and can come up with a slightly different score.

Lenders have the right to choose whether they want the old Empirica/Beacon/etc FICO, or the Next Gen FICO. Most mortgage lenders are still going with the older one because Fanny Mae still uses it. Consumers don't get a choice. You are being sold next Gen FICO. It may or may not match up.


Okay, I don't have any information to argue.

I do know that ten weeks ago that was not the case. Ten weeks ago I ordered my reports, as a consumer, directly from the big three CRAs, with scores, and they each provided me with their standard score (Empirics, Beacon, etc.) that matched EXACTLY with the reports pulled by the lendors through a third-party providers.

xtn
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Tasmin,

Yeah, it sounds like some folks on the board are being a bit hostile to Javi. He raises some excellent points that most of us probably never knew, and if I had been pinched by this behavior, I'd probably be pretty hot about it, too. It's legal, but seems pretty unethical. And it's not like CapOne is a small outfit. They could be hurting a lot of people, as there are a lot of people that may be on one of the borderlines between ranges, or a CapOne card could be their first card out of college, so the damage isn't distributed across a broader credit history.

I think the ire here should be directed at CapOne -- they are deliberately harming their customers so as to keep them captive. That's pretty $#itty, in my book. And that's why I'll be finding my CapOne card this weekend, and telling them they can have it back.

Dean
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A low fico score can be very costly. A buddy of mine picked up his lifetime dream car, a lexus RX330, yesterday. Since he made the mistake of co-signing a loan for his stepdaughter, and she made two payments late last year, his score is 674. That made his payments, according to the Lexus dealer, $30/month higher. If he had been over 700, he would have saved about $1400 over the 48 month term of the lease.

Um. $30/month seems an insignificant amount in the face of *leasing* a car for four years. Having a low FICO also seems less costly than choosing to lease the car of one's dreams rather than waiting to save up the money to buy it or a more modest car (though certainly it's true the low FICO doesn't help).

I understand wanting something really, really badly. I just think it's funny to consider $1400 costly in light of what his decision to lease this particular car at all is likely to cost him.


--Booa (not trying to say you should never buy the car of your dreams, just struck by the difference in order of magnitude of the price of things--$30 vs. the monthly lease cost)
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If you remove from the equation any third-party calculated scores, you are left with my point. The big three CRAs do NOT provide different scores to lenders than they do to consumers.



Yes, they do. They are still trying to get the rest of the lending world to buy Next Gen FICO (so they can make more money). So if you go to any of the three bureau's sites and order your FICO they will sell you Next Gen FICO. (They don't give you an option.)

Most of the lending world is still analyzing the results of the new formula and still are using the older scores they are familiar with. Most companies have not yet redone their models to incorporate the new FICO score.

And yes, as you are seeing for many people they will be the same or very close. They can be very different though.

Choose to ignore me if you want, but I do work in the lending industry and I do work with the models and I am very aware of the fact that for each person each bureau sends a file on we get both the older FICO score, and the Next Gen FICO. Consumers only get one, and it is Next Gen.
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I do know that ten weeks ago that was not the case. Ten weeks ago I ordered my reports, as a consumer, directly from the big three CRAs, with scores, and they each provided me with their standard score (Empirics, Beacon, etc.) that matched EXACTLY with the reports pulled by the lendors through a third-party providers.


I would be interested to know how you know they are Emirica, Beacon, etc. because I was not given any option when I went to the websites.

Unless they have backed off the Next Gen thing in the last few months, which I have not heard about at all.
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$600/month for something you want today.

$30/month for four years starting today for a mistake you made five years ago.

Which hurts more?
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$600/month for something you want today.

$30/month for four years starting today for a mistake you made five years ago.

Which hurts more?


Honestly? The $600 a month. Maybe because I'm broke right now, and $600 a month would really, really improve my situation significantly. Heck, I'd be so flush that I could spring for the *good* Ramen. :-)

Plus, I'd be inclined to view the $30/month as the price of a lesson learned, and let it go. Cheap at the price.

But I can't imagine paying that much a month for a car, even if I was rich. Guess I'll have to get rich and see. :-) Maybe the problem is just that cars are not such a high priority for me that I could see paying that much for one, ever, unless I was making...jeez, two million dollars a year. If they are that important to your friend, and he's got all of his other financial stuff in order, that's fine, it just still strikes me as a little funny about the $30/month for four years bugging him. He's going to pay $28,800 to drive a car for four years, at which point, his lease will end and he won't have the car anymore. I guess he'll have the pleasure of having owned the car, but honestly, $1400 versus $28800--maybe he can view it as a small tip? 5% or so?

I guess it's all in your perspective. I'm not saying my point of view is right, it just strikes me as funny (funny-peculiar, I'm not sitting here in gales of laughter about it. I'm puzzled).

Anyway, sorry if I offended you. I did not mean to insult you or your friend.


--Booa
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I would be interested to know how you know they are Emirica, Beacon, etc. because I was not given any option when I went to the websites.

Each report gives the name of the score, and then to the right of that it gives the actual number.

Experian report says:
Fair, Isaac Model XXX

Equifax report says:
Beacon XXX

Transunion report says:
Empirica XXX

Okay it's not exactly like that, and each report is a little different as far as formatting goes and stuff. But they all have the name of their score, and the number, and an explanation sheet for us 'stupid' consumers.

xtn
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Choose to ignore me if you want, but I do work in the lending industry and I do work with the models and I am very aware of the fact that for each person each bureau sends a file on we get both the older FICO score, and the Next Gen FICO. Consumers only get one, and it is Next Gen.

I don't choose to ignore you. I just have recent evidence to the contrary. If you are right, my experience is unexplainable, and if I'm right, your experience is unexplainable. In my mind I am seeking some sort of explanation that fits with both our accounts.

My first thought was that only Fair, Isaac themselves would make any money by pushing a new model, you know, just like Microsoft has to come up with a new Windows every now and then to keep revenue up. But then I realized there must be some way the CRAs would increase revenue also, or else getting them to switch models would be a pretty tough sell, so that's out.

I though maybe this is just new in the last ten weeks or less. But you've said you aren't sure perhaps they've DROPPED it recently. The two concepts don't mesh. Hmmmm.

Now I'm wondering if you work in the LENDING industry, in what capacity do you work with the models. Do you mean you happen to see scores all the time, or are you actually involved in model evaluations/comparisons of some nature? If you work for/with a LENDER is it possible you are recieving both the regular scores and this so called Next Gen FICO because the lender you work with/for happens to pay extra for some proprietary rating? Is it possible you have just assumed this is industry standard when it really isn't? But then your writing is clear and accurate, and your arguements are mature, so I assume you would know the difference if you're willing to stand on your position. Although there do seem to be lot of people 'in the industry' who don't have an accurate picture of how all this stuff works, I'll give you the benefit of the doubt, so this idea is probably out too.

xtn (hates being unable to figure things out)
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Thanks xtn, Dean, Tasmin, Joel, and everyone else who jumped in the crossfire to save my butt :-)

Well, I've been flamed for just about everything possible, and yet almost nothing was relevant to my original point: Cap One's reporting harms credit scores. The only argument that was anywhere near was Nancy's "I have a Cap One card and my score is high, so it must not be true". That doesn't mean that it isn't affecting ME or a bunch of others. Your situation is different from mine (you may have other cards that buffer the ratio, or maybe you didn't have a balance on Cap One when you checked your score). And, again, unless knew you score right before and then right after carrying a balance on your Cap One for the first time, you'll never know for sure if it's affecting your score or not. A single score from three years ago is not enough.

Let's see... what else did I get flamed for?

I got flamed for spending too much on credit reports.

I got flamed for being a gullible fool and believing everything I read.

I got flamed for being too emotional (you'd be emotional too if a $90 charge reversed seven months and $8,000 worth of sacrifice).

I got flamed for making assumptions about Cap One's intentions.

I got flamed for "playing the ratio game" (whatever that means) even with a balance of only $90

I got flamed for checking only one credit report both before and after the charge appeared.

I got flamed for relying on Equifax's Plus Score which doesn't know the difference between "high balance" and "credit limit" (apparently neither does FICO, because my limit there is also listed as $151).

I got flamed for thinking 40 points or more makes a big difference.

I got flamed for how I'm planning to correct this issue.

And yet not ONE of those frivolous and irrelevant arguments disprove my original point in any way; Cap One's reporting harms credit scores, whether intentionally or not. They are just a bunch of cheap shots at me. I don't know... maybe there are more Cap One stockholders and employees in here than I thought, or maybe it's just a bunch of people with big egos who can never be wrong ("I have a Cap One card and I NEVER make a bad decision, therefore this fool must be WRONG").

The only thing I'm willing to back out on is that Cap One does this on purpose. Given all the sneaky antics that have made Cap One notorious these past few years I'm a little reluctant in giving them the benefit of the doubt, but I'll admit that there's not enough proof that is was done deliberately (even if it's on print). BUT, the fact remains. They can hurt your credit scores, even with a very low balance, deliberately or not. And that is the whole point of this quarrel. Open your eyes, and be careful how you use that card.

And thank you Fools for making my first post ever the Topic of the Day! WOOT WOOT! ;-)

Cheers,

Javi
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Choose to ignore me if you want, but I do work in the lending industry and I do work with the models and I am very aware of the fact that for each person each bureau sends a file on we get both the older FICO score, and the Next Gen FICO. Consumers only get one, and it is Next Gen.

---------------------------------------------------------------

I don't choose to ignore you. I just have recent evidence to the contrary. If you are right, my experience is unexplainable, and if I'm right, your experience is unexplainable. In my mind I am seeking some sort of explanation that fits with both our accounts.


I think you can both be right, and that can be explained, by the lender you went to, xtn, pulling the NextGen FICO. The other poster in the thread (sorry, I don't remember your name) said that companies are thinking about switching, and are getting both scores while they consider their decision. Maybe the place you (meaning) xtn went to decided to make the switch, so that you both saw the same score.

Anyway, that's one explanation that fits all the data.


--Booa
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Booa,

Perspective makes a big difference. 20 years ago, my friend was driving $200 beaters and didnt have a pot to pi$$ in or a window to throw it out of. He took a big step about twelve years ago and quit smoking dope and started his own business. He has been pretty successful, is about five years from having his home paid for, and has decided he can finally afford to reward himself. He has wanted a Lexus since they started building them about 15 years ago. He is pretty tight about most things, and it just makes him angry that he let his stepdaughter persuade him to cosign a loan and he is more angry that he didn't educate himself as to what cosigning a loan really meant. It is much less the money and much more the fact that, as a grown man, he should have understood what he was signing. He is mad at himself for his own stupidity.

Hope this makes things a bit more clear.

Dean
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40 points should not affect you THAT much. If it does, then you were on the brink of bad credit anyway

Are you serious? In some cases, like car loans, the difference between a 700 and a 660 is a full point of interest-the difference between a 3.99 rate on that new car to 4.99. On a relatively expensive car, that could mean more than $1000. Are you suggesting that a 700 fico score is "the brink of bad credit"

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Are you serious? In some cases, like car loans, the difference between a 700 and a 660 is a full point of interest-the difference between a 3.99 rate on that new car to 4.99. On a relatively expensive car, that could mean more than $1000. Are you suggesting that a 700 fico score is "the brink of bad credit"

If you have to care about what your FICO is then you are either on the brink of bad credit OR trying to get there. Good credit means that a FICO is irrelevant.

Fred
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I think you can both be right, and that can be explained, by the lender you went to, xtn, pulling the NextGen FICO. The other poster in the thread (sorry, I don't remember your name) said that companies are thinking about switching, and are getting both scores while they consider their decision. Maybe the place you (meaning) xtn went to decided to make the switch, so that you both saw the same score.

Anyway, that's one explanation that fits all the data.


Well, that WOULD fit. I don't accept it easily though. Remember I went to MULTIPLE lenders, and My own reports list the names of the scores (Empirica, Beacon, etc.) so accepting that explanation requires accepting that all the lenders I used happend to be pulling this Next Gen thing, AND that the CRAs continue to call their scores by the old names even when using this Next Gen.

If they were trying to get everyone to switch to it, I think they would at least make it noticible to the consumer in order for consumers to push lenders into using the same thing. Just a thought, but it makes sense.

xtn
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Javiair,

Hi. For what it is worth, I am a finance manager at a car dealership, and I used to carry a Capital One card as my only credit card. I have seen many, many credit reports with Capital One cards showing no credit limit, just a high credit, and that was reflected on the bureau in the FICO score summary Transunion provides me. Based on my seven years experience, everything you are saying is true. Capital One and Citibank (on at least some of their cards) reports "High Credit" but not "Credit Limit." That means if your balance is close to your high credit, then it appears the card is maxed out, and that has a negative impact on your score. The degree of the negative impact depends on the number of other cards you carry and the limits listed for them. For someone who carries three other cards with high limits and minimal balances, Capital One's practice is pretty unimportant. For someone like me who only carries one card because I only need one card because I pay it off in full every month, it can be a big deal. Capital One's practice can sometimes have a very pronounced negative impact on FICO score. Over the last two years my monthly charges have never been less than $1500 and never been more than $2500. Usually they're right around $2000. So most of the time, it looked like my card was at around 80% of its limit, which I believe cost me somewhere around 30 points. I believe that to be the case because last summer when I had the Capital One card my score was 725. I dumped the CapOne in September, got an MBNA card with an $8000 limit, and, with everything else more or less equal, my score is now over 750. Now I understand that that particular difference in that FICO score range means very little to lenders. But I also know darn well that the difference between 680 and 705 can mean real money on a mortgage. Some people have made light of my friend's experience seeing his car payment go up $30/month over 26 points. I think $30/month for 48 months is a lot of money.

Just my .02

Dean
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dt,

Here is what I have seen many times on credit reports. Lets say we're talking about my old CapOne and my new MBNA.

Cap One

highcredit 2387
creditlimit
balance 1900

available credit is 487/2387=20%


MBNA

highcredit 2387
creditlimit 8000
balance 1900

available credit is 6100/8000=76%



If either of the above cards were someone's only card, then choice of cards can have a significant impact on FICO score.

Since the FICO scoring model takes high credit to be the credit limit when that information is not reported, therefore the Capital One card appears to be near its limit, while the MBNA card appears to be far under the limit.

I hope this helps

Dean-who has the "Trans Union Credit Report Training Guide" in his hands right now, and would be delighted to fax it to anyone who asks for it. Just email me a fax number.
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Booa,

Perspective makes a big difference. 20 years ago, my friend was driving $200 beaters and didnt have a pot to pi$$ in or a window to throw it out of. He took a big step about twelve years ago and quit smoking dope and started his own business. He has been pretty successful, is about five years from having his home paid for, and has decided he can finally afford to reward himself. He has wanted a Lexus since they started building them about 15 years ago. He is pretty tight about most things, and it just makes him angry that he let his stepdaughter persuade him to cosign a loan and he is more angry that he didn't educate himself as to what cosigning a loan really meant. It is much less the money and much more the fact that, as a grown man, he should have understood what he was signing. He is mad at himself for his own stupidity.

Hope this makes things a bit more clear.

Dean


Yes, that does make a difference. Thanks for adding the background. It makes more sense that he's mad about still having fallout from something he did 5 years ago to be nice and that turned around and bit him in the butt. More of a "No good deed goes unpunished," than the amount of money, so yeah, that makes a lot of sense to me now.

Sorry to harp so much on it, and thanks for being nice in discussing it. :-)


--Booa
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Well, that WOULD fit. I don't accept it easily though. Remember I went to MULTIPLE lenders, and My own reports list the names of the scores (Empirica, Beacon, etc.) so accepting that explanation requires accepting that all the lenders I used happend to be pulling this Next Gen thing, AND that the CRAs continue to call their scores by the old names even when using this Next Gen.

If they were trying to get everyone to switch to it, I think they would at least make it noticible to the consumer in order for consumers to push lenders into using the same thing. Just a thought, but it makes sense.

xtn


Huh. Now I'm confused. Your reports list the scores' names? Empirica, Beacon, etc? Those are the old ones, aren't they? Maybe it's that your lenders pulled the old ones? Aren't those the ones that are supposed to be different? Though I guess time is a factor in the scores, so if you pulled them all on the same day, maybe that's why they were the same? Also, DBAVelvet (I found the name) said that sometimes the scores are the same and sometimes different, depending on the person whose scores they're pulling.

Sigh. I dunno. Sometimes I think FICO is just there to mess with our collective heads. I'll shut up on the subject now.


--Booa
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She called up the company she pulls reports from and they explained that the formula used to create FICOs sold to individuals is simplified and is an approximation. The official formula is much more complicated and accurate.

DBAVELVET,

Hi. I have some information on the FICO scoring model that was provided to me by my Transunion representative. I would be delighted to fax the section describing the various scoring models that Fair, Isaac and Co have created to serve the various types of lenders. Fair, Isaac and Co, through their research and their efforts to predict behavior in the future, have found that sometimes people handle different types of credit differently. Some folks will die before they make their car payment late, but will let credit card bills slide. Since a lender issuing credit cards cares more about how their prospective customer will handle a credit card than how they might handle a car loan, Fair, Isaac and Co have developed overlays that fine-tune the scores to suit the needs of credit card companies, mortgage lenders, consumer finance companies, and auto lenders. Can I fax this training material to you?
Is there anyone else on the board that would care to review this material?

sincerely

Dean Kidd
Business Manager
Worden-Martin Inc
www.wordenmartin.com
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Huh. Now I'm confused. Your reports list the scores' names? Empirica, Beacon, etc? Those are the old ones, aren't they? Maybe it's that your lenders pulled the old ones? Aren't those the ones that are supposed to be different? Though I guess time is a factor in the scores, so if you pulled them all on the same day, maybe that's why they were the same? Also, DBAVelvet (I found the name) said that sometimes the scores are the same and sometimes different, depending on the person whose scores they're pulling.


I suggest reading this entire thread start-to-finish. Especially my posts.

xtn
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I suggest reading this entire thread start-to-finish. Especially my posts.

xtn


Okay. Sorry for butting in.


--Booa
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A low fico score can be very costly. A buddy of mine picked up his lifetime dream car, a lexus RX330, yesterday. Since he made the mistake of co-signing a loan for his stepdaughter, and she made two payments late last year, his score is 674. That made his payments, according to the Lexus dealer, $30/month higher. If he had been over 700, he would have saved about $1400 over the 48 month term of the lease.

And this goes to show why cosigning <> good.
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Ok, I have one example where they differed greatly. You have one example where they didn't.

How can you say "generally" with only one anecdote?


Ah, DBA Velvet, this reminds me of a favorite quote from a statistics professor:

The plural of anecdote is not data

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Dean,

Thanks for posting that information. That is how I thought it was reported on the credit report. While I agree with you that if your only card is a Capital One, or any other card that does not report the credit limit, it could impact your FICO score, I don't feel the company is doing that because they want to screw all of their customers.

Too many times people feel someone is out to get them simply because the numbers are not in their favor. These companies may very well have valid reasons for not reporting the credit limit, I cannot say for sure because I have no idea.

To anyone that this is a serious concern, I would encourage you to do any of the following things:

1. Dispute the lack of credit limit with the CRA. This may or may not do anything as I am not sure if this falls under the category of information that can be disputed. But since it does have an impact on your FICO score, I would think it is worthwhile to try.

2. Call the offending company and voice your complaint with their practice and see if they can give an explanation as to why the CL is not reported. Also, PlanetFeedback.com may get you a response from the company.

3. Vote with your feet. Drop the offending card and transfer any balance to a new card that does report the credit limit.

FWIW, I do appreciate the fact that the OP called this practice out to inform anyone that was not aware of this and that may be concerned about their FICO score being impacted. However, I do feel the OP went a little over the top in trying to make it out that Cap One is solely out to screw him over.

dt
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Are you suggesting that a 700 fico score is "the brink of bad credit"

No, what I'm saying is if the OP is saying 40 points will <snip> tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc</snip> then he was on the brink of bad credit anyway. Going from 700 to 660 would definately suck for the OP...but it wouldn't do what he's saying it would do. Only being on the bottom end of FICO would do what the OP is saying.
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Dean,

Is there anyone else on the board that would care to review this material?

I don't have a fax number available to me but do you have this electronic format? I would like to take a look at it.

Ok, I just remembered services like eFax so I signed up for a free fax number and will send that via email. Please let me know if you do not get it.

dt
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A low fico score can be very costly. A buddy of mine picked up his lifetime dream car, a lexus RX330, yesterday. Since he made the mistake of co-signing a loan for his stepdaughter, and she made two payments late last year, his score is 674. That made his payments, according to the Lexus dealer, $30/month higher. If he had been over 700, he would have saved about $1400 over the 48 month term of the lease.

And this goes to show why cosigning <> good.


Has he told his stepdaughter what her mistakes are costing him? Putting some guilt on her might be a good thing - at least make her realize that paying late does have an effect on things, if she doesn't realize that already. He could ask her to pay that $30/month amount as well, since she tainted his name by needing him to vouch for her.

Dave

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I think you can both be right, and that can be explained, by the lender you went to, xtn, pulling the NextGen FICO. The other poster in the thread (sorry, I don't remember your name) said that companies are thinking about switching, and are getting both scores while they consider their decision. Maybe the place you (meaning) xtn went to decided to make the switch, so that you both saw the same score.


Actually I was the one who was sold Next Gen FICO, and xtn got the older scores.

If his were pulled by a lender then that could explain the differencce.

Mine were the ones you get by going to the credit bureaus website and requesting you FICO score. That is the new Next Gen FICO, (which to xtn's point isn't an industry standard, but is definately external to my company.)

In my experience, what the lender showed me did say Empirica, Beacaon, etc. but it was quite different from what I pulled earlier that day from the three websites. (yes, all three were significantly different)
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<<<No, what I'm saying is if the OP is saying 40 points will <snip> tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc</snip> then he was on the brink of bad credit anyway. Going from 700 to 660 would definately suck for the OP...but it wouldn't do what he's saying it would do. Only being on the bottom end of FICO would do what the OP is saying.>>>

I agree that I might have gone a little overboard on the possible consequences, but let's see by just how much:

Some common mortgage rates based on credit scoring (from the FICO website):

Score:....Rate:
720-850 = 5.75%
700-719 = 5.87%
675-699 = 6.41%
620-674 = 7.56%

Now, remember that the 40 points is the hit I got for the high ratio only. As I explained, I am also getting hit for having a low credit limit, but I don't know how much that is affecting me because I've unknowingly had it for a while and I don't know my score prior to that. So let's assume that it's a 10 point hit like in the example I used earlier. If I have a 722 score, a 50 point hit could send me down three levels, from a 5.75% to a 7.56% rate (BTW, I believe that most lenders set their FICO levels at 20-point increments, so that scale above might be a bit optimistic)

For a conservative $150,000 30 yr. fixed mortgage at those rates, the total sum of payments would be:
at 5.75% = $315,000
at 7.56% = $379,800

So theoretically the difference could cost someone $10,000's. No exaggeration there after all.

And the whole dramatic thing about ruining my chances of starting a business and living a better life and yadda yadda yadda, well... I guess it really could hurt those chances and might get me turned down by more lenders, but in reality it would be just one more obstacle to overcome and not the final nail on the coffin for that dream. I was angrier at the principle than at the actual damage done. Sometimes you have to scream to be heard.

Cheers,

Javi

PS: Dean, thanks for that explanation, and I'll be emailing you my fax number soon.
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dt,

I will be off work until Tuesday, but will be glad to send it then. To anyone else who emailed me, I'll be sending out the information I offered at that time

Dean
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Has he told his stepdaughter what her mistakes are costing him

Are you kidding? I'm surprised you didnt hear him telling her, he was so calm about it. Yes he told her.
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I will be off work until Tuesday, but will be glad to send it then. To anyone else who emailed me, I'll be sending out the information I offered at that time

Thanks! I will look for it on Tuesday.

dt
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"Capital One deliberately fails to report credit limits in order to lower their customers credit scores and therefore discourage competitors from contacting Capital One's customers with more competitive credit card offers!"

JaviAir, thanks so much for your post. Unfortunately your warning came too late for me. However, my experience with CapOne Credit Card was a lesson well-learned. I had a couple of bad experiences--including the same expereince you had, but one motivated me to just finally close the account. I don't regret how it may have negatively affected my credit rating. I simply couldn't afford to leave myself vulnerable to their shoddy practices.

I was charged a late fee of $29 because my payment was one day late. It was the Saturday, June 28, 2003, due date deadline. I suspect that my payment sat on someone's desk until that Monday, June 30, 2003, when it was officially posted as paid. Scandalous! When I spoke to a representative (a courteous and professional exchange between us), I requested that my account be closed. The representative then tried to sell me on other "better" credit card accounts--I had been requesting a lower interest rate and a higher credit amount for almost two years--My request was always denied. Now all of a sudden they have a change of heart--after I've just been charged a late payment?!!!

A surprising disappointment about this whole experience was the patronzing response I got from a Fool member (he shall remain nameless--he knows who he is). After I recounted my CapOne experience he wrote to me and stated that "I should have asked sweetly..." Huh??? I'm a consumer making a customer service request from a company I do business with; I'm not Daddy's little girl begging for a favor or a treat.

It was a weird experience--both CapOne and the Fool member's response.

The good news is that I'm no longer considered "dead" to the credit lendi
ng world (my llifelong fear of being in debt), and my credit is now rated as "Excellent".

Thanks to the great support and advise from the Fool community (well, most of the Fool community!).
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To anyone who wanted the credit report/fico information.

I am having difficulty with my free lycos email account. If anyone wishes me to send them the information, other than dsemmler and javiair, who I have already contacted, please reply to this post and Ill be glad to email them a private email address. Sorry this is becoming such a pain.


Dean
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Several people have suggested trying to dispute the Capital One credit limit with the credit bureaus. Please be careful with this if you try. If this is a postive tradeline (especially if it's positive), the credit bureaus have been known to DELETE it entirely in response to your dispute. Also, for many people who are able to get a credit limit reported for the tradeline, it disappears the next month when capital one updates again. These scenerios have been discribed in detail at creditboards.com. Proceed with caution.

Tamsin
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I of course read this with great interest and would like to follow up w/ a few questions. Could JaviAir, and others puleeze contact me, or provide an email or phone so I can contact you. I am continuing my research on the topic of credit limits.

I'm also very interested in DBAVelvet74's perspective. So I hope y'all see this and give me a shout. Nobody will be quoted, or their info used in any publication, without their consent.

Evan Hendricks
Author
Credit Scores & Credit Reports: How The System Really Works, What You Can Do
www.CreditScoresandCreditReports.com
www.PrivacyTimes.com
(301) 229 7002 [office]
evan@privacytimes.com
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