If you thought that credit card applications for unsecured credit cards with best rewards such as cash back or bonus points or credit cards with no fees or lowest APRs are the major attraction online, then, very probably you missed or just didn't give serious consideration to such credit cards as no-limit credit cards.
No-limit credit cards are becoming a valuable plastic for many credit consumers today, satisfying their tendency to spend as much as they want. What's more, besides the no-limit credit line advantage, cardholders are also entitled to rewards like air miles and other perks especially enticing for businessmen and other credit consumer categories who tend to spend large amounts on their credit card.
Today credit cards applications for no-limit credit cards may be found with Citibank, American Express and Diners Club and are generally intended for traveling, entertainment as well as buying products and services.
According to the statistics, the percentage of no-limit credit cards holders is growing but not all of them are aware of a trap. As a rule, such credit card applications are available for good-to-excellent credit customers with a high credit score who are generally too self-assured to concede credit problem or too busy to check up their credit score.
And the problem does arise! What is it that affects your credit score even if you do not default on your credit card bills? What is it in a no-limit credit card that takes you to a denial when you go to apply for a car loan or mortgage?
Quite unexpectedly but it is the absence of reports to the credit bureaus! As it is, not all credit card companies report your highest balance and the lack of information on your credit spending damages your credit score.
Well but this problem comes not from nowhere. It originates from the very essence of a no-limit credit card. Thus, if you are now in the decision making whether to apply for it or not, it's important for you to define how the card works.
The name speaks for itself. Compared to traditional credit cards that are issued with a definite credit limit which shouldn't be exceeded, no-limit credit cards allow you to purchase in excess. It appears that this type credit card does have limit but as you can easily exceed it month after month, it is called "revolving". And the highest balance of each month is in fact your current credit limit.
That's where the mess is. Credit card companies do not always report the highest balance and it makes your credit scores drop. And even if you paid off the whole balance, it is not reflected in your credit report.
Lots of credit consumers have got their credit damaged because of that but credit card companies do not offer any solution yet.
There are some ways however to improve your credit score. If you have experienced this very drawback of a no-limit credit card, you can do the following:
- Ask your creditor to report the balance(although you cannot be sure it will be reported month to month);
- Run up a high balance one month and pay it off. Make sure the credit card issuer reports on that.
If you fail in this adventure, the only recourse would be to close the account and jump onto another credit card product.
Are you still allured by no-limit credit card applications? Do you still want to achieve some of your goals by possessing this very credit card? Then, do apply, but protect yourself by making sure your credit reports are sent and the information listed there is really accurate.