Credit Card Company’s Failure to Report Credit Limits to Credit Bureaus Negatively Affects Your Credit Score

FDCPA Claims

Many people are aware of the FDCPA and its rules that protect consumers against harassment and misleading collection calls and letters.  But did you know that the FDCPA applies when a creditor’s credit bureau reporting practices lead to an unnecessary drop in your credit score?

Improper credit bureau reporting was the basis of a series of lawsuits against credit card giant Capital One.  Although Capital One has changed its practices as a result of lawsuits and unfavorable publicity, it previously engaged in a practice of reporting its customers’ payment histories but not including their credit limits in its submissions to the credit bureaus.

Why was this a problem?  With no credit limit disclosed, the Fair Isaac algorithm concluded that your balance was equal to your credit limit.  Since one of the factors that goes into calculating your credit score is your “credit utilization ratio,” your score might reflect a 100% utilization ratio for your Capital One account.   A 100% utilization will depress your credit score, whereas a 10% utilization ratio would function as a positive factor that will increase your score.

Capital One has apparently changed its practices, but you should be aware of the damage that arises when a creditor does not report your credit limit.  From now on, when you review your credit report make sure to confirm that your credit limit is shown for revolving credit accounts and that the credit limit number is accurate.


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Jonathan Ginsberg

For over 25 years, Jonathan Ginsberg has represented honest, hardworking men and women facing financial troubles.

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