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Posted: 12:00 a.m. Wednesday, Aug. 15, 2007

Capital One gets a pat on the back from Clark


For the last few years, Clark has trashed Capital One -- one of the nation's largest credit card issuers and the purveyors of those memorable "What's in Your Wallet?" commercials that people either love or hate. Well, today the company gets some praise from Clark because it's agreed to change a policy about how it reports your information to the credit bureaus. In the past, Capital One would not report how much of your credit limit you were using. That way it always looked like you maxed out 100 percent of your credit, effectively destroying your score. According to Clark, this was an intentional move on Capital One's part because they wanted to hurt your credit and prevent other companies from poaching their customers.

Now the company has agreed to report credit limits to the bureaus. So some Capital One customers will have big score boosts and be eligible for better auto insurance rates, homeowner's insurances rates, mortgages and more. Capital One's change is huge because 30 percent of your credit score is based on how much credit debt you're carrying versus how much credit is available to you. So someone who has a card with a $5,000 limit and uses only $1,000 (20 percent usage) has a higher score than someone who has a card with a $20,000 credit limit and uses $15,000 (75 percent usage). Also it's important to know that when you change credit card companies you shouldn't close your old account. You need to keep it open -- even if you don't plan to use the card -- so that you can get a higher credit score.