CL Reduction - How to avoid when paying off?

[Anonymous]

From 2008-2010 CCC's went crazy from jacking up interest rates, closing accounts and reducing credit lines. Although our economy is still recovering, most of their extreme measures occurred before the cc act went into place.

I too had difficulties during 2008 with the loss of a parent, evil sisters and attorneys fees that I allowed to put me into a credit crunch that I had never been in. I did what I had to do to survive; ruined my credit in the process. I have no regrets about saving my grandfather's farm from being sold and my son I own it now with no mortgage. In 2008, I had 13 cc with high balances; 4 now closed with 2 pif in 2008 and 2 settled in 2010. I currently have 9 active accounts, 5 pif. I am working on the 4 remaining and will have my car pif in Nov 2012 (10 more payments!). I re-fi my house with Obama plan this past August 2011 and other wise have not had any inquiries on my credit since 2008. My credit sank to an all time low of 548 in summer 2010, last summer it was up to 649. I plan to get my scores again in March after some payments post. Although I want to increase my FICO score, my primary goal is to get out of debt. I have an Excel spreadsheet with a serious plan and budget. Been doing some temporary part time work to increase revenue for those unplanned expenses.

I know in 2008-2009 it was common for CL reduction as balances were being paid down. I don't want that to happen to me this fall and next year when I am ready to pay these last cards off. I am currently paying more than the minimum on 2 cards, but can't attack the other two until the car is paid off. I don't need the high CL, but as I pay them off I don't want the CL lowered because I want to increase FICO by decreasing utilization. I am scared to attack just one card for fear of the cl decrease; should I go for it anyway or should I spread the wealth across all 4 cards, gently lowering balances without spooking/alerting the company for a few months and then paying them off one by one? I used the snowball method these last 2 years because all of my interest rates are over 22% except one (19.99) and therefore not much savings to pay one over another.

Are there any flag amounts that alert the cc to review the cl?

Thanks and say a prayer for my next FICO inquiry!

[Revelate]

Welcome to the forums, and FWIW I think you did (and are doing) absolutely the right thing.

There's no one-size fits all for avoiding CLD or account closures, as every lender is different.  I wouldn't worry too much about this as both time and positive payment history are going to be your primary score increases over the long-term... and CL's can always be re-established.

What I would suggest, is you have living expenses now: spread these out over the cards you intend to keep.  Beyond that, don't do anything other than showing them what they're expecting to see: responsible use of the card, paying back on time, and more than the minimum where possible.  They do know how much you're paying down your balances each month if they so choose (it's data reported and collected by the bureaus), so unless you do something to draw attention to yourself, you're probably going to be OK.

Needle in the haystack principal: there's hundreds of thousands of CC holders for any of the medium to larger credit institutions (10's of millions in some cases I'd wager), arguably unless you go looking for something from them (higher CL, product change, etc) they're likely never going to get around to a full review.  There's PLENTY of people in worse situations than you, so it'll be a while before their automatic reviews get down to your levels unless you do something to either grab their attention, or let the card go inactive.

My opinion anyway, may not be based in fact, YMMV, etc ad naseum .

[Guava]

IMHO, you don't know when CL decrease would happen and when it happened there's no thing you could do about it because the decision is with the bank, and they just do what they do to protect their money

[jumpinjax]

I agree, there is no use fretting over whether your CL will decrease or not.  Let time pass by, pay all your bills on time, and enjoy life!!!  That is what its there for.

[UpNComing]

I feel your pain.  It's happened to me more than once.  Every time I pay a large chunk I wait for the CL axe to swing my way.

[webhopper]

I think the credit limit decrease, closure crunch is over...  In 2009, my Lowes account with a 3600 limit was closed by the credit grantor the very week I paid it down to 0 balance... Which really pissed me off, since I own rental property, and I needed an account for emergencies....  They didn't even tell me, I had to find out by being declined at the register and talking to customer service....

After that, I was paranoid about Discover closing my account, at that time, discover card had a 2k limit, so I revolved a 1100 -1200 balance for 12 months.  I would pay it down, but then go ahead and recharge basic living expenses through it. If that card would have closed, then I would have had NO credit card account at all, and I would have lost my oldest account.    Fast Forward to 2011. I got an automatic CLI in July 2011 and also in Dec 2011,  so I'm not that worried anymore, the account is PIF and I don't think they'll close my account, as the pressure for CLD and account closure is pretty much over. 

[LS2982]

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@Revelate wrote:

Welcome to the forums, and FWIW I think you did (and are doing) absolutely the right thing.

There's no one-size fits all for avoiding CLD or account closures, as every lender is different.  I wouldn't worry too much about this as both time and positive payment history are going to be your primary score increases over the long-term... and CL's can always be re-established.

What I would suggest, is you have living expenses now: spread these out over the cards you intend to keep.  Beyond that, don't do anything other than showing them what they're expecting to see: responsible use of the card, paying back on time, and more than the minimum where possible.  They do know how much you're paying down your balances each month if they so choose (it's data reported and collected by the bureaus), so unless you do something to draw attention to yourself, you're probably going to be OK.

Needle in the haystack principal: there's hundreds of thousands of CC holders for any of the medium to larger credit institutions (10's of millions in some cases I'd wager), arguably unless you go looking for something from them (higher CL, product change, etc) they're likely never going to get around to a full review.  There's PLENTY of people in worse situations than you, so it'll be a while before their automatic reviews get down to your levels unless you do something to either grab their attention, or let the card go inactive.

My opinion anyway, may not be based in fact, YMMV, etc ad naseum .

---

+1

[Anonymous]

I was hoping that the CLD and closure was nearing an end. The banks were bailed out and if they were going to close these accounts, I think they would have already done so. Unfortunately, I have had to keep charging on these cards while I paid the others off. Couldn't have made it this far otherwise. My cash flow was so low at one time, we were catching fish at the farm for food.......we have learned a lot and I would not trade the knowledge and discipline for anything. We went from charging groceries to a $250 monthly cash budget which includes pet food and paper products. We cook instead of microwaving quick meals and I can pay for my son to eat at the school cafeteria instead of a sandwich. We also can tithe a small amount at church again and that is very rewarding.

I have no intention of drawing any attention as I pay these cards down. One of the four cards I am paying the 3 year payoff payment and one I am paying more than the 3 year payoff. I just can't do anything more with the other 2. The car is zero interest so I won't pay it off early! That was when my credit was spectacular; I will be there again!  What I am scared of is if I all of a sudden start making really huge payments, that might get someone's attention. In less than a year I will be at this point and could make the payments across the board on all 4. I had also thought of bringing all cards down by util rate: first 80, then 50,30,10....

[BlueNightStar]

Congratulations skyjenn, you are doing fabulous. I admire your determination. I am in the same boat as you and I wouldn't trade the things I've learned for anything either. Now when I get any raises or additional money I still spend as if I had very little and put money in my savings account. Never had one before so it feels good.

I'm in year two of debt payoff and should be complete by the end of this year. I will tell you that large payments have gotten the attention of my CC companies. Chase started SPing me when I made a large payment and then every month thereafter. I've stopped making huge payments and instead am budgeting my money to make higher than minimum payments but nothing out of the ordinary for my account. I pay a good chunk each month but keep the amount consistent. No one has CLD me using this system and they've all stopped watching me as closely. No quarantees of course, but I thought I would share my experience.

[Anonymous]

Thanks Blue Knight! That's what I was thinking. May stockpile the cash for a few months, steadily increasing the payment so that they don't see the "all at once" and then pif at the end in a big way! It will take me this year and next, but I will get there. I am looking ahead for the first time, in a long time...

It's been almost 4 years since dad died. Traumatic enough losing a parent, but to have evil siblings ........ well, the least they did was tell me I was adopted @ 46yold and try to have me disinherited on that sole basis.... and it went downhill from there. The estate was only settled November 2010. I did everything my dad wanted, and i have suceeded. He would be so proud that my son will one day own the family farm. I have hard assets, just no cash! LOL  gotta laugh, what else ya gonna do?!