Feb
Credit Report Stories
Our readers have sent in some very interesting questions about their credit reports:
- What exactly does credit utilization do to your credit score?
- What happens if you put personal expenses on a business card (Or your company thinks you did!)
A reader, Brian, asked this question:
Hi, If you have 3 credit cards, 2 of the 3 cards have no balance on them. The 3rd card has a balance that is near the limit. Will this one balance hurt my credit score, even though my utilization ratio for all 3 of the cards is under 30%??
Brian
A question about credit utilization:
Brian, thanks for your question.
You are wondering whether or not the 30% rule (keeping your debt under 30% of your available credit) means all of your available credit, or your credit available per account.
It’s a really great question, and I wish there were a clear answer.
FICO keeps it’s scoring system secret. They release general guidelines that tell us how we all “should” act if we want to maintain a high credit score.
The only thing I can tell you for sure is that they both matter. How much they both matter is anyone’s guess.
How much debt you have compared to your credit limit amounts to 30% of your credit score. Having a balance close to the limit on any account will impact your credit score, but the impact will be an unknown percentage of 30%. How’s that for Greek?
The best thing you can do is to pay down the balance on that account as quickly as possible. As far as your credit score goes, it’s better to play it safe.
I’m sorry I couldn’t give you a better answer. Both types of utilization matter, but FICO has never put anything out that says exactly how much each account matters.
Personal Liability for a corporate card?
Another reader, Don, had this question:
Icon-blank wondering if you may be able to assist me in finding some recourse information for my wife’s credit delema. My wife was most recently working for a top pharmacutical co. and was issued a Corp. Credit Card from American Express. Unknown to her on her card she was charged for their rewards program that she did not want! she was issued the card from her Co. I think somewhere around 2003. She only used this corp. card for corp. business and never used it for anything personal! She has since been displaced from her co. and finds out she has a personal balance of Approx. $625.00 owed to AE for the reward program.
American Express claims that this balance has been carried forward all this time as the Co. she worked for did not pay! Her company over the years also sent her for perks a AE gift Card for performance bonuses. Now we find out supposedly she had used a reward program reward but thought it was a gift card issued from her co. and AE is determined to charge us back fees for their program.
Question I have is can I get out of this charge because we never ever wanted this! Your Help? Don
Thanks for your question Don.
You have a few options in this situation and you may end up having to work with all of them.
I would start by finding out whether or not your wife has any personal liability for this card. Meaning that if you don’t pay the bill, will it damage her credit, or her former employer’s.
If she used her social security number to sign up for the card, then she is personally responsible. If she was the one who received the monthly bill, then she could be responsible (but I am not sure about the legality of that - do any of our other reader’s know?)
If she is not personally responsible for the card in any way, then it is her former company that will be stuck with the tab for these charges, and not your wife. That is something you would have to work out with them.
If your wife does legally owe the money to American Express, then the best thing to do is call American Express. Ask them who authorized these charges to the card? If it wasn’t your wife, and they can’t prove that it was your wife, then you are probably off the hook as far as liability is concerned too, but you will still have to get American express to agree.
You can also go head to head with Amex if you want to. Tell them that you never authorized the charges on that card, and you did not understand that the gift certificates we a result of the program.
You will definitely have to speak to a manager (or a manager’s manager) if you want to resolve this. Don’t even bother speaking to the person that answers the phone initially, they aren’t going ot be able to help you.
Go straight on up the corporate ladder at Amex until you are able to speak with someone who can actually help you get the charges removed off of the account.
If American Express has been billing you for something that you never authorized, then it’s their problem too.
This is a situation that I would say, just don’t let it go until it’s resolved. It’s going to be trouble, any way that you handle it, so just work with the situation until it goes away.
Make sure that you keep her former employer informed as well, especially if your wife has no personal liability for the credit card.
Thanks for your question!
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