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debt utilization

Should I Replace a Credit Card That Doesn’t Have a Credit Limit

John
I closed a Platinum AmEx because the unlimited credit limit actually shows up on my credit report as $0 credit. I opened an AmEx Blue account instead. Was that a good move?

Answer
If your goal is to get an account on your credit report that actually helps your revolving utilization percentage then yes, good move. If you’re referring to the Amex Platinum charge card then it’s not being considered for that percentage in the newer scoring models. You now have a new inquiry on one of your credit reports that could be hurting your score a bit and you will have a new account on all three of your reports that will also probably hurt the scores a little bit. But, in the grand scheme of things having lower utilization is much more important and actually having a card that shows a high credit limit is a good move. By the way, your old Amex card really does have a limit. It’s called a “shadow limit.” Do you really think you can go out and charge an unlimited amount of goods or services on that card?

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