BEWARE! Discover dropped my CL for no reason!

[Open123]

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NRB525 wrote:Your unspoken rule about never going over 30% is not the way to properly use the credit you have available. In certain circumstances, when saving money is involved, such as on a low APR BT, it is more important to use the available credit line to save the interest cost.

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+1

Right, this reminds of me people who make investment decisions based on tax implications rather than on the merit and efficacy of the investment.  Always make the decision best for one's financial circumstances, not for scoring purposes.  

Credit scoring/tax implications should be a consideration, but NEVER the main reason for the decision.

[Anonymous]

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@Anonymous wrote:

Hello,

Here's your simple answer! You allowed it to reach $1700 out of $1800 Credit line. That's like maxing up the card even if you paid it down later. The unspoken rule is to never go over 30% of your credit line! I did the same thing with a Capital One Quick Silver and Paid it in full every month and never late on anything. They never increased my credit line in 3 years and they declined every request but they did increase it on another account with them. allowing a high balance of $1700 over $1800 is maxing up the card and it is seen as a dangerous sign. Your maximum balance should have been even for 1 day not to exceed 30% of $1800=$540. which is exactly what they did by reducing your line to $550.

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This makes no sense.  If a cc extends me $1000 why would I not use all $1000 if I need it as long as I pay it down soon?  What's the point of qualifying for a nice sl with a card if you can only use 30%?  You can use whatever you want as long as you can pay it down before statement.  Even then, if you can't, you are totally fine with using a good amount of the cl.  Just be prepared to pay interest and take a minor score hit for higher uti.

[Anonymous]

Good morning everyone!

 Happy Saturday. You guys must be on the East Coast, because I woke up at 6 AM here in California and I see so many responses to my post from yesterday.  I appreciate all your feedback even if we disagree. You all have very valid points and we are here to share our experiences and opinions of course based on our own experiences with different banks and credit card and life experiences. 

 When I brought up the 30% usage of credit line, it is based on my goal to maximize my Fico score. Of course if you have $1000 credit line you can charge up to $1000 but it would drop your credit score. I have subscribed to many different credit monitoring services and the minute I have a balance over 30% on it,  I see that lowers my credit score. I have read many articles issued by banks all suggesting that to maximize your Fico score you should use no more than 10% of your total credit line and use no more than 30% of each individual card to keep a high credit score and get automatic Credit line increases. I do take advantage of special offers  for example discover is offering 10% cashback with Apple Pay. I pay it off weekly so I don't have a balance of $5000 showing up on my my credit report with $6000 credit line for example.

[OmarGB9]

Exactly, the 30% thing only matters for maximizing scores, but in general, and for most people outside this forum, it really doesn't matter. Plus, it's one thing to use your entire credit line and pay it off in full or down to 30%> before statement cut and quite another to actually report high utilization. One can use their card as much as they want in any given month, up to and including the full limit, provided of course you don't go over and make large payments to bring it back down by statement close.

[NRB525]

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@Anonymous wrote:

Good morning everyone!

 Happy Saturday. You guys must be on the East Coast, because I woke up at 6 AM here in California and I see so many responses to my post from yesterday.  I appreciate all your feedback even if we disagree. You all have very valid points and we are here to share our experiences and opinions of course based on our own experiences with different banks and credit card and life experiences. 

 When I brought up the 30% usage of credit line, it is based on my goal to maximize my Fico score. Of course if you have $1000 credit line you can charge up to $1000 but it would drop your credit score. I have subscribed to many different credit monitoring services and the minute I have a balance over 30% on it,  I see that lowers my credit score. I have read many articles issued by banks all suggesting that to maximize your Fico score you should use no more than 10% of your total credit line and use no more than 30% of each individual card to keep a high credit score and get automatic Credit line increases. I do take advantage of special offers  for example discover is offering 10% cashback with Apple Pay. I pay it off weekly so I don't have a balance of $5000 showing up on my my credit report with $6000 credit line for example.

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Fair enough, and you are correct, if a card is reporting over 30% it can reduce your score. The question becomes, by how many points does it reduce your score? It is important to keep perspective on how much FICO impact we are talking about, because it is not 100 points for going over 30% on one card.

I also think there is a threshold at about 50% on individual cards, because in June when three or so cards that had been over 50% all came under 50%, I had a nice score increase. Two small cards went back over 50% recently, then below 50% and each of those moves (crossing 50% on one card, up or down) gave me a 7 point move.

[Anonymous]

For some reason a few people are arguing against spending 90% or more of his/her credit limit and then paying off the entire balance before the statement date (before the creditor can report your high utilization rate to the credit bureaus). I don't quite understand this.

Someone also remarked that a customer can't even have one day with his/her credit limit maxed out, even if the balance is entirely paid before the statment date. Banks make money by having their customer spend their money As long as the customer doesn't have the maxed out balance reported to the bureuas, the customer is A-OK. I don't understand their viewpoint. Perhaps someone who holds that view can explain.

Here is the quotation:

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Designer91 wrote:

Hello,

...allowing a high balance of $1700 over $1800 is maxing up the card and it is seen as a dangerous sign. Your maximum balance should have been even for 1 day not to exceed 30% of $1800=$540. which is exactly what they did by reducing your line to $550.

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[Anonymous]

This was taken from Capital One website:

Stay below your credit limit

“Maxing out” your credit card, or carrying a balance that exceeds 70–75 percent of your credit limit, appears as a warning sign on your credit report and could harm your credit score. It’s important to know your credit limit, and stay well within it.

Regards to all!

[OmarGB9]

Again, only if it's actually reported to the bureaus. Throughout the cycle though, you can charge and pay, charge and pay as necessary in order to only let a small balance report by statement cut.

[Anonymous]

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@Anonymous wrote:

This was taken from Capital One website:

Stay below your credit limit

“Maxing out” your credit card, or carrying a balance that exceeds 70–75 percent of your credit limit, appears as a warning sign on your credit report and could harm your credit score. It’s important to know your credit limit, and stay well within it.

Regards to all!

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That's only if you don't pay your balance before the statement date. Your credit score can not change unless there is a change to it, meaning, you allowed your creditor to report your high utilization rate. 

[Anonymous]

Also,

An important point to consider from experience:

I understand the argument of paying off the balance before it is reported but some banks still report to the credit bureau under the "High Balance" section the amount that you reached at one time say $990/1000 even if the balance of $990 was never reported as a balance owed at any given month. So, now you apply for another credit card or even request a credit line increase and they decline you and send you a letter with the reason in all capital letters that I got:

"PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH"

I got this from both Discover and Synchrony and I thought it was untrue and rediculous considering I only had 2-5% utlization reported.