88% aggregate Util, when will Chase/CO take AA?

[Anonymous]

I know someone has been sitting at 88% aggregate utilization for at least 2-3 months now, possibly up to 6 months, yet no AA has been taken against them yet.  They have a total of 8 credit cards.  3 are store cards, 5 are from bigger banks (2 Chase, 3 Capital One).  All of the Chase and Capital One cards have been at 93%-99% utilization for this period of time.  2 of the store cards are at around 40% utilization and the 3rd is their only card with a $0 balance on a toy limit. 

I'm quite surprised that none of their creditors have taken AA yet.  How long will Chase and Capital one let this go?  I figured perhaps some members of this forum that have had AA taken against them by these banks could weigh in with what their aggregate utilization was, individual credit line utilization and how long it took before AA was taken. 

[Anonymous]

AA is not something the banks do lightly it's with heavy deliberation. Just having high utilization generally is NOT cause for adverse action to be taken. High utilization is actually something that the banks love. High UT means that they're actually making a profit off of you paying the interest rather than paying in full every month and them not getting any profit out of you being a customer.

Now if there's high UT and missed payments that's a different story, then they're not making a profit and you seem risky to them and they will consider taking adverse action against you. Likely chasing down your limit with each payment.

[happypill]

How much money are we talking here?  If each card has a limit of a few thousand dollars, the banks could very well let them continue paying the minimum for the next 10 years and just collect the fat interest margins.  If they have higher limits, the chances of some kind of AA and balance chasing are higher.

Back before I joined myFICO, I had one Cap One card with a $1k limit and they were happy to let me continue paying interest on it.  Sometimes I would pay the entire amount and other months I would pay the minimum.  I didn't understand why my scores kept going up or down by 30 points (depending on the util that cut for a given month).  Total risk to the bank was $1k so not worth their while to take AA if I kept making payments to maintain this lucrative behavior.  These days I only PIF.

[sarge12]

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@Anonymous wrote:

I know someone has been sitting at 88% aggregate utilization for at least 2-3 months now, possibly up to 6 months, yet no AA has been taken against them yet.  They have a total of 8 credit cards.  3 are store cards, 5 are from bigger banks (2 Chase, 3 Capital One).  All of the Chase and Capital One cards have been at 93%-99% utilization for this period of time.  2 of the store cards are at around 40% utilization and the 3rd is their only card with a $0 balance on a toy limit. 

I'm quite surprised that none of their creditors have taken AA yet.  How long will Chase and Capital one let this go?  I figured perhaps some members of this forum that have had AA taken against them by these banks could weigh in with what their aggregate utilization was, individual credit line utilization and how long it took before AA was taken. 

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That would drive me insane...the ridiculous interest is AA enough in my book...makes me think of a young me. BBS, try to convince your friend life is too short to work just to pay interest, because that is most likely about all he is paying. Good luck in any attempt to steer your friend in the right direction. PIF is the only smart way to use credit cards unless of course you have a 0% intro.

[Anonymous]

My wife and I sat at over 50K 89% util for roughly a year with zero AA from Chase, Cap1, Amex, or anybody really.

One thing that I will say is, we paid off large chunks and then spent again mid month. Probably wasn't the best to avoid interest, but we would pay like 3k here and then spend it again, 5k there and spend it again. We were building a house. Now that we're done, we turned that 89% util into less than 30 in 2 weeks and I'm getting approved left and right - off subject I know.

Anyways, AA doesn't always happen, I imagine the credit profile comes into play. We both have high income and we never gave them any sort of indiciation that we couldn't pay... Hope that helps explain why this person hasn't been through an AA

[Anonymous]

Also don't forget that banks don't just go by credit report factors when it comes to AA.  Your profile bucket you're in may also concern your address/neighborhood, employer if listed on CRs, and other matters that aren't strictly FICO 08 related.

High utilization is ONE possible factor for AA, but it isn't a guaranteed factor.

[AverageJoesCredit]

Sorry Brutal, too many complicated words in your title to understand, ,

But seriously, id imagine its a combo of things perhaps like previous history etc. Hopefully no one gets AA'D but id suggest to said person to be aware of possibilty

[CreditDunce]

If your friend has been a good customer always paying their bills, there may never be AA taken.  If they do decide to balance chase it will be when your friend starts paying the balance off.  While the cards are maxed out there isn't much point in reducing the limits.  Chase would be the only one I would be concerned about.

[Anonymous]

Thanks for the replies everyone.  It makes sense that the banks would like to just collect interest so long as it keeps getting paid on time.  The highest 2 limits are the Chase cards which I believe are $4k.  The rest of the limits are smaller, so total CC debt is about $12k.

I think a late payment would probably stimulate AA.  The profile in question has late payments on 3 different accounts back in 2014, but nothing since that time.  I would imagine that a reported late payment on any of the current maxed out accounts may not just result in AA with that account, but by other accounts as well if they see the reported late payment.

Not that it's really relevant to this discussion, but I was a bit vague with my original post when I was "I know someone..." and everyone implied above that it was a friend.  It's actually my ex, so we're really not friends.  I spent the better part of 6 years with her trying to get her to take credit seriously, pay off all debts, etc.  She made a lot of improvements under my guidence, especially in the last few years, but since we split up (and possibly for a bit before which was hidden from me) she's hit the downward spiral.  I honestly think AA would be the best thing for her as it would put an end to her spending.  I mean, with everything maxed out now I guess that could be considered an end... but for her sake if those limits were slashed and/or accounts closed it would actually be a good thing to prevent her from staying in the same position forever.

[Anonymous]

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@Anonymous wrote:

I honestly think AA would be the best thing for her as it would put an end to her spending.

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I agree with this.  I want the banks I have a relationship to make a profit -- on other people.  I don't want those banks to have to spend more CSR money trying to collect on bad debtors.  When I was a bad debtor, I am positive my banks had a helluva high cost involved in collections and I wish I hadn't gotten into credit hell when I did.

But when I help people rehab their credit, I usually know in a few months if they're going to charge back up to the max or not, and then I just stop helping them.