Thursday, May 25, 2006

Deadline 5/22/2006: Regulators Seek Consumer Comments About Credit Reporting – Capital One refuses to report credit limits

The FACT Act of 2003 requires regulators to issue guidelines and regulations for creditors and collectors who report to credit bureaus to ensure the accuracy and integrity of the information they furnish. Despite the FCRA requirement to report “complete” account information, Capital One refuses to report the credit limits to make it more difficult for account holders to obtain credit from competitors.

(LITIGATION NEWS) May 17, 2006 — The FACT Act of 2003 amends the Fair Credit Reporting Act (FCRA) and it requires the Federal Trade Commission, Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration to write rules relating to furnishers of information to credit bureaus. The FTC press release:

Consumer advocate Christine Baker filed suit against Target and Capital One in Phoenix Federal Court on 6/9/04, case # CIV-04-1192-PCT-NVW, for their failure to report the Credit Limits for revolving accounts. The court already ruled that Target does not have to report Credit Limits despite the requirement for “complete” reporting in the FCRA. Ms. Baker hopes that the regulators will order creditors and collectors to furnish all relevant data including the Credit Limits to the credit bureaus.

According to Fair Isaac, its FICO credit scores are utilized in over 75% of credit decisions and the proportion of Balances to Credit Limits (Balance/Limit ratio) is one of the most important score factors. FICO scores range from 300 – 850 and “amounts owed” account for 30% (up to 255 points) of the scores. What’s In Your Score Even a seemingly irrelevant error or missing data can lower the scores substantially.

Ms. Baker is a credit score consultant and she researched FICO credit scores for over 10 years. High Balance/Limit ratios often cause credit scores to drop over 50 points and it is extremely important that creditors report not only accurate, but also COMPLETE data to the credit bureaus.

The increase of the Balance/Limit Ratio from 39% to 60% lowered Ms. Baker’s FICO score 38 points. Her Equifax FICO score was 742 on 4/30/06 with a total credit card balance of $18,271. The most important score factor: “The proportion of balances to credit limits on your revolving accounts is too high” and “the proportion of balances to credit limits (high credit) on your revolving accounts is 39%.”

After two Capital One credit card checks posted to the accounts, Capital One immediately reported the new balances to the credit bureaus (CRAs). On 5/2/06, the revolving balances totalled $28,090, the score dropped 38 points to 704 and the first negative score factor was still the Balance/Limit ratio, but now at 60%.

Ms. Baker then paid the Capital One accounts and on 5/16/06, the score again increased to 743 with a total revolving balance of $19,190 and a Balance/Limit ratio of 39%.
The court filings to date are posted at and Ms. Baker’s response to the Capital One motion for summary judgment along with her credit reports and other exhibits will be added shortly.

Capital One freely admits that it reports only the High Credit, the highest balance for the account, instead of the Credit LIMIT. Ms. Baker even submitted her statement with the correct credit limit of $7,000 to the CRAs, but they continue to report only the High Credit.
Capital One is quick to report balance increases to the credit bureaus, but balance reductions are not reported immediately.

While the overall B/L Ratio is less affected by missing Credit Limits on reports with other open revolving accounts, scores are also lowered by individual “maxed out” accounts.
Capital One has over 50 million accounts and it targets consumers with credit problems. It designed its sophisticated credit reporting system to inflict maximum damages to its account holders’ credit scores in order to maximize “customer retention” by lowering account holders’ chances of obtaining credit with more favorable terms from Capital One competitors.
The Capital One refusal to report the Credit Limits mostly hurts low income or otherwise disadvantaged consumers. Few affluent consumers carry Capital One credit cards and obviously they can simply pay off their credit cards.

Regulators and powerful legislators such as Senator Paul Sarbanes have been fully aware of the devastating impact of the Capital One refusal to report the correct Credit Limits for at least 5 years. Ms. Baker requested comments from Senator Sarbanes and she will update if he should respond.

Most regulators, legislators and judges personally benefit from the exploitation of the disadvantaged as their own credit scores are higher and they receive the most favorable offers. Ms. Baker can’t help but wonder how many people in power are paid off by the credit industry lobbyists. It is inexplicable that not one legislator has the courage to fight for the disadvantaged and to stand up to Capital One.

Since 2001, Ms. Baker dedicated most of her time and money to researching, publicizing and litigating credit issues. As she is not an attorney and she has no legal skills, it is not surprising that she does not prevail in court against the nation’s largest corporations with unlimited funds for corporate law firms.

It is very difficult to find attorneys willing to work for consumers. Ms. Baker welcomes inquiries from interested attorneys or law students and she is willing to pay a competent attorney $500/hr for advice regarding discovery, evidence and the appeal.
Ms. Baker outlined many additional credit reporting problems in her submissions to regulators’ previous requests for public comments, posted at

Almost all creditors and many insurers utilize credit scores to approve or decline applications and to establish rates. It is extremely important that consumers submit their comments about credit reporting at—it only takes a few minutes.

Western Capital Editorial Note: Although we have had our differences with Ms. Baker, we are impressed by her tenacity and knowledge in this area of the law. Good Job Christine!

Robert Paisola, CEO, Western Capital Financial

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