What is a No Preset Spending Limit
Credit cards with no preset spending limit don't have a defined credit limit for that card. Instead, each borrower's spending limit is decided based on his or her income, payment history, and previous spending patterns. The preset limit can change. You might be denied for a purchase that's outside your normal limits, even if your spending limit is high enough for the charge. On the other hand, you can often have your limit increased by request.
No preset spending limit credit cards are given to borrowers who have excellent credit history, those who've shown they can responsibly use a credit limit.
No Preset Spending Limit Impact on Credit Score
Preset spending limit credit cards are rumored to have a negative effect on your credit score, but it depends on how your credit limit is reported to the credit bureaus. Part of your credit score considers your credit utilization - how much of your credit limit is being used.
The credit score calculation depends on the credit limit your credit card issuer reports to the credit bureau. If there's no credit limit reported, the credit scoring calculation (at least the FICO score) ignores that credit card for the purpose of calculating credit utilization. However, if the credit card issuer reports your highest balance or your current credit limit, your credit score could affected if your balance is the same as or close to whichever number the credit card issuer reports for your credit limit.
