Like a three-card-monte dealer, Capital One is enticing consumers hoping to better their credit scores while jacking up interest rates for its long-time customers, even those with sterling credit and a good repayment record.p>

Capital One says it will begin reporting its cardholders' credit limits to the three national credit bureaus -- a step that could boost the FICO credit scores of some of its 50 million customers by 40 to 80 points or more within a few months.

The higher FICO scores would allow Capital One cardholders to qualify for lower mortgage interest rates when they buy or refinance homes and, one would think, help them get or retain a low interest rate on their credit card.

Not so.

Over the last few months, Capital One cardholders have been receiving notices that their interest rate is going up -- way up.

"I have had a Capital One credit card for over 5 years that was supposed to be fixed at 9.9% FOR LIFE. Now they tell me they are changing it to 15.49% variable. Did I die or something?" Galen of McMinnville, Ore., complained to

Galen's complaint is similar to those of hundreds of other consumers who received an impersonal card telling them that, for business reasons, Capital One was raising their interest rate.

The notice makes no attempt to appear personalized and does not imply the customer is at fault. It's strictly a "business decision," the card states.

"I have never been late, always paid well above the minimum every month and considered them a reputable company," Galen said. "What's in my wallet? Certainly not Capital One from now on. I just pulled my $15K balance and put it in B of A at 2.99% for the next few months."

Galen is not alone. Many of the affected consumers have shown no hesitation in dropping Capital One and successfully applying for a card from another bank.

An attorney who frequently writes for had the same experience. She promptly applied for, and received, an Advanta card with 0% interest for 15 months and 7.99% thereafter. But, having read the fine print, she selected a pair of shoes from the Capital One premium catalog before canceling her account.


Whether or not Capitol One's sudden change of heart regarding credit scores was motivated by its desire to counter the uproar over its sudden interest rate hikes, the decision resolve an issue that has irked consumer advocates for years.

Capital One has long been pilloried for withholding its customers' credit limits in its regular reports to Equifax, Experian and TransUnion, the three national credit bureaus.

Many cardholders aren't aware of it but their credit scores can be artificially depressed if creditors do not report their maximum credit limits. That's because Fair Isaac assigns a heavy weight -- 30 percent of a person's entire score -- to what is known as "utilization" of available credit.

In other words, those who have a high credit limit but don't actually charge all that much would get a higher FICO score than those who are chronically bumping into their ceiling.

If Capital One hoped consumer advocates would bury it in garlands, the response may have been disappointing. The typical reaction could be summed up as, "About time."

Or, as Travis Plunkett, legislative director for the Consumer Federation of America, said in a San Francisco Chronicle article, it's a shame that "so many people were put at a disadvantage by their own credit card company."