Consumer Credit / Credit Cards
Do NOT Apply for a Capital One Credit Card!

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By JaviAir
August 27, 2004

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Hello all, this is my first post here. I was saving my first post for the day I paid off my last unsecured account (Sallie Mae student loan, $5,300), but I think my experience with Capital One needs to be told.

If you are applying for or already have a credit card with Capital One, read on. You may be seriously getting screwed financially because of their unethical practices. Hopefully this is not a repost (I did a search and didn't find anything on this).

After having sent my final payment to all my credit cards last month and doing my first Happy Dance to the original "Tequila" while doing my best Pee Wee Herman impression, I enthusiastically went to check my credit score through Equifax's Credit Expert service today. To my dismay, my score was 40 points lower than last month! What the #*@$%*? My score has been gradually increasing as I've been paying off my cards these past seven months (almost $8,000 total). Why did it go down 40 points after paying them off completely?? As you Fools know, 40 points is no joke and can make a huge $$$ difference over the life or a mortgage.

After almost having a stroke, I noticed that my Capital One card was still showing last month's balance of $90 (I usually don't have a balance on that card). Fine, but the credit limit for that card is $500, so I'm only at 18% of my balance-to-limit ratio, which is lower than last month, so why did my score go down? But then I noticed something odd; the credit limit for the Capital One account was not being reported to the credit bureau (unlike all my other cards). Only the highest limit was being reported (highest balance I've ever carried on the credit card), which was $151. Therefore, Equifax was reading the $151 as the credit limit instead of the actual $500. This puts me at a 60% balance-to-limit ratio!

After having a very frustrating conversation with a Capital One service rep who could barely speak English (darn outsourcing) and kept insisting that a full-scale investigation be launched on the $90 balance (that's not the issue, Sahid!), I called back and talked to a very polite and helpful rep who informed me that Capital One's current policy is to NOT report credit limits but that they are aware of the "inconvenience" that it causes and are going to change their policy soon. He then suggested what I had already thought of; max out my card by depositing one of their checks into my bank account and then paying off the card immediately with that same money, therefore raising my highest limit - and therefore my perceived credit limit - from $151 to $500. Superb, I thought. Just an honest mistake (sort of) on their part.

But then, not even 15 minutes later, I stop at Barnes and Noble and, of the hundreds of thousands of books they have in stock, I pick up a new 350 page book about credit ("Credit Scores and Credit Reports", by Evan Hendricks), open it up and almost instantly I'm on a page about Capital One. I don't know what the odds are of that happening, but if that book was a lottery ticket I'm sure I'd be a millionaire right now. According to the author, Capital One deliberately fails to report credit limits in order to lower their customers credit scores and therefore discourage competitors from contacting Capital One's customers with more competitive credit card offers! What?!? You mean to tell me that this company knowingly tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc, just so they could make a couple extra bucks off me??? I think that's sufficient grounds for legal action against them.

Oh, and another thing. Even if I keep my Capital One balance at zero, my credit score would still be lower than it should be. One of the factors that negatively affect my score according to Equifax is that my credit limits are low (referring obviously to the $151) and it shows that lenders don't trust me with high limits, therefore reducing my creditworthiness or something lame like that. So who knows how many more points beyond those 40 Capital One is really costing me.

Sorry for the long rant, and thanks for listening. Hopefully I'm returning the favor and helping a few Fools in here as many of you have helped me in the past :-)



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