While the average consumer does indeed have myriad questions about this topic, uncertainty is heightened among those using No Pre-Set Spending Limit (NPSL) credit cards.
This lack of transparency compounds the problem consumers have in determining how to best manage their NPSL cards in a way that prevents any damage to their FICO scores.
Issuers do not report these actual credit limits to the credit bureaus because they want to maintain the illusion that their cards provide unlimited spending, even though they make it clear on disclosures that NPSL does not mean unlimited spending.
Because of the importance of a credit limit to your credit score and the lack of a communicated limit to consumers, the question must be posed: How does FICO determine credit utilization on NPSL cards when there is no credit limit?
According to a recent CardHub.com study, in the absence of a true credit limit, issuers report to credit bureaus either the highest balance reached with an NPSL card over a certain period of time or its revolving credit limit for the determination of credit utilization.