How Is Credit Utilization Calculated on Charge Cards

image- Feb 27, 2020Credit Card Info0 comments

Credit Utilization

Credit utilization is one of the big factors that credit scoring models look at. Credit utilization is calculated by your current balance versus how much percent of your available credit or credit line was used. The higher the percent of your credit line you spend, the higher your credit utilization will be, and the more will it affect your credit score. But when it comes to no preset limit cards*, like the American Express Gold and American Express Platinum credit cards, there’s a problem in that these cards don’t have a preset credit limit. So the question that we will discuss in this post is: how does Fico calculate credit utilization in regards to no preset limit cards?

The Old Method

In the past, Fico used to use the highest balance within the last 24 months as the credit limit. Based on that amount, they used to calculate the credit utilization. For example, if your highest balance you had on a charge card was $10,000 and in the last month, you spent on the same charge card $5,000 you’re credit utilization would be 50%.

The problem was that if someone had the same spending pattern every month, then his credit utilization would always be maxed out or close to maxed out and his credit would be killed.

The New Method

Fico has announced that charge card/ no preset limit card balances will not anymore be factored into credit utilization calculations. This basically means that having a high balance on a charge card will not affect your credit utilization any longer.

But please keep in mind that a high balance on a charge will still affect your overall high credit usage, which is also a factor in the Fico scoring model.

Do Not Get Too Excited

It is important for you to know that even if Fico changed the way they will calculate charge card utilization on their new models. Unfortunately, when it comes to mortgages and some auto loans the old Fico versions are still used. Therefore (at the time when applying for a mortgage or auto loan), using a personal charge card (not business) will still affect your credit utilization (as explained above).

Which Credit Cards Are No Preset Limit Cards

At this time American Express is the only major credit issuer for no preset limit cards*.

The following personal credit cards have no preset limit*:

  • Amex Gold (personal and business)
  • Amex Platinum (personal and business. including the co-branded Platinum credit cards-Mercedes Benz, Morgan Stanley, Goldman Sachs, etc)

If you have any of these credit cards (personal only), be careful when using them before you apply for a mortgage or auto loan.

*No Preset Spending Limit means the spending limit is flexible. [In fact,] unlike a traditional [credit] card with a set limit, the amount you can spend adapts based on factors such as your purchase, payment, and credit history





Rather watch a video?




Know someone that is looking for information on how to build and improve credit? Have them sign up for this great blog! They will thank you and I will thank you too!

Thanks for reading!

Was this article helpful?

Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

Leave A Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.



  1. Credit Utilization - Help Me Build Credit - […] It’s also important to point out that charge cards or cards without a preset credit limit can be very…

Recent Posts

Follow us


Click here to subscribe to
our WhatsApp channel

best offers


Chase Ink Business Preferred

Earn 100,000 points after $15,000 spent within the first 3 months.

more info

Chase Ink Business Unlimited

Earn $750 (75,000 points) after $7,500 spent within the first 3 months. Intro 0% APR for 12 months on purchases.

more info

JetBlue Card

Earn a total of 100,000 points after a total of $6,000 spent within the first 12 months. See offer details for full offer. Intro 0% APR for 12 months on balance transfers.

more info

Chase Sapphire Preferred

Earn 60,000 points after $4,000 spent within the first 3 months.

more info

You May Also Like

Which Credit Cards Are Approving? December Update

Which Credit Cards Are Approving? December Update

Guess what, it’s been who knows how long, and the Covid pandemic is still going on. Some good news though came in yesterday. The US Senate and House have agreed to a new $900 billion stimulus deal which will provide a $600 payment for each family member. We all...

read more
How To Use Your Amex Airline Incidental Fee Credits

How To Use Your Amex Airline Incidental Fee Credits

Updated 01/19/21: As per many reports United Travel Bank is no longer working. So the year’s almost up and we’re getting lots of questions about how to use the airline fee credits quickly, before they expire. Let’s “fly” right in! Many Amex cards offer a credit called...

read more

Download link sent

Got it*please check your promotional inbox

Error sending download link

Try Again