Cards that do not report credit limits
Capital One refuses to report its customers' credit limits to the three major credit bureaus. Instead, the bureaus use the highest balance a customer has charged as a proxy for the limit.
Not reporting the limits can prevent competitors from spotting a company's more creditworthy customers, since those tend to be the ones with higher limits.
The FICO scoring system groups people with similar histories together when rating them. These groups are called "scorecards." If you have a bankruptcy on your report, for example, you'll be grouped on a scorecard with other bankrupts. Your credit habits may look pretty good compared with theirs, but if the bankruptcy were to disappear from your record you'd be lumped in with people who have stronger histories. Your credit behavior might not look so good compared with this new group.
Lower interest rates are generally better when you're trying to pay off debt, but taking advantage of a balance-transfer offer can wallop your credit scores in a number of ways. Just opening a new credit card to take advantage of the offer can ding your scores by 5 points or so. If you're transferring your balance to a card with a lower limit, that also can hurt your scores, as can consolidating debt.
In the latest versions of the FICO formula, score creator Fair Isaac Corp. fixed a glitch that often penalized folks for paying old debts that had been charged off and sent to collection agencies. (See "When paying old bills can hurt your credit.")
Traffic tickets and library fines
I wrote about this issue in "New threats to your credit score," and the trend has gained momentum since then. Local governments are determined to recoup some of the $40 billion in unpaid debts consumers owe, including unpaid library fines, parking tickets and traffic penalties. So these governments increasingly turn to private collection agencies, which typically report the unpaid amounts to the credit bureaus as part of their efforts to pressure consumers into paying the fines. The collectors may add late fees or other charges that increase the balance.
For answers to your financial questions, call David Fairman at Tucker Mortgage (317) 290-7730.