How Do Charge Cards Affect Utilization and Credit Score?

Will the Charge Card be calculated into Balance? How does Charge Card calculate the credit limit? Will Charge Card affect the Credit Score?

This is a very very common issue, but different people hold different ideas, it’s hard to reach a consensus. In this post, we will have a look on that.

We all know that Amex issued some good Charge Card, the most common is PRG and Platinum Cards, the biggest differences between them and ordinary Credit Card are following:

  • No Pre-Set Spending Limit (NPSL),literally understanding is that there is no Pre-set limit, and seems like the level is very high, ha ha! But if you spending without any limit is also not permitted~ In fact, NPSL also have hidden quota restrictions, you can check through the check spending ability from Amex homepage.
  • Pay in full every month, compared with Credit Card, you can only pay the minimum due and will not be reported late payment,yet for Charge Card, you need to Pay in full before the specified date after the closing date of each month, or you will pay the worse result~or you can also treat that as a card whose min due equals to statement balance all the time.

Given the existence of the two points, you are still confused about how does the Charge Card affect the Credit Score, generally,the arguments are mainly concentrated into the following two points:

  1. How does the Charge Card calculate the credit limit?
  2. Will the balance of Charge Card be calculated in the utilization, which will further affect the Credit Score?

Originally I have planed to buy one for you from myFICO to do a verification, but unfortunately Credit Bureau refused to report and claimed that SSN was less than two years…if we want to resolve we need to call to Credit Bureau one by one, therefore, here we provide you some results searched online, especially the dialogue from myFICO forum.

After searching in the myFICO, now we are confirmed(according to FICO 8 Score Model):

  1. For Experian and TransUnion, Charge Card will not have affect on Credit Limit and Utilization Ratio, the calculation of the two items on their report was directly canceled.
  2. For Equifax, the High Balance of Charge Card will be reported as Credit Limit, and then Statement Balance will be calculated Utilization Ratio, further will affect the EQ FICO 08 Credit Score.
  3. For the three one, Statement Balance will all be calculated into Debt Owned( Pay attention this not only calculate the util), Repayment on time will also be reported due time repayment. So Charge Card and Credit Card are the same in Credit history and Repayment history.

Therefore the searching conclusion by now is: on Credit history and Repayment history, Charge Card and Credit Card have the same result in Score increasing. In debt ratio and limit calculation, Experian and TransUnion will not consider the existence of debit cards, yet Equifax does.

So actually, those are only got by searching, but of course we are also looking that how Charge Card will affect the Credit Score. Same time with our experiment, we also welcome you provide the Data Point actively and help us make clear of this “trouble” issue.

P.S.: The function of Check spending ability will be blocked after three times per day, you need to wait for 24 hrs if you want to check again. Further more, no frequent check, there are Data Points online saying that overly frequent check will trigger Financial Review (FR).


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