Method for reporting bandwidth loss on a network link that couples a switch element to a network is provided. The method includes determining if credit is unavailable to transmit a packet and a packet is available at a switch port for transmission; determining bandwidth loss due to lack of credit; and reporting the bandwidth loss to a processor of the network switch. The switch element includes a processor for executing firmware code; a port for receiving and transmitting network packets; and a bandwidth loss logic that determines bandwidth loss if credit is unavailable to transmit a packet and the packet is available at the port; and reports the bandwidth loss to the processor.