Many cardholders do not know that using certain credit cards with no spending limits can have a negative impact on your credit score.  Cards such as Visa Signature or World MasterCard can affect your credit utilization ratio, which is a key component in determining your credit score. 

To determine if your credit card may be damaging to your credit score, you would need to understand how the issuer reports transactions to the credit bureaus.  If the issuer reports the card as an open account, your credit utilization would not be impacted.  However, some credit card companies report these no limit cards as being revolving accounts with a credit limit of the highest balance within a given time period.  Doing so can have great detrimental effects on a person's credit score. 

Credit card comparison sites, such as CardHub.com, help consumers determine which cards can have a negative impact on their credit score.  They also rank different credit card providers in terms of consumer-friendliness.  Based on their study Chase, Citibank and American Express received good ratings.  On the other hand Capital One, Wells Fargo, USAA and Bank of America received only fair ratings. 

Chief executive officer of CardHub.com, Odysseas Papadimitriou said, "May advice is just don't use such cards."There is just so much diversity” in how issuers report the information and “the issuers can change what they report and how they report it at any point in time and they don’t have to notify you.”

Even so, many card issuers insist their reporting methods follow industry guidelines.  Capital One spokeswoman, Pam Girardo said, "Reporting credit limits on these accounts is a regulatory expectation."  “Our approach is supported by the industry standard reporting guidelines, which are published by a consortium of the credit bureaus,” she said, adding that “while we don’t control or necessarily even have insight into third party credit-scoring models, we don’t believe our reporting has a negative impact on the higher spend transactors that are the target audience for these cards.”