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Regular Contributor
homerunstacy
Posts: 188
Registered: ‎01-12-2008
0

CL's slashed

What causes CL's to be slashed?

 

 - panic at seeing a new baddie   ie- 60 day late pay with paying partial per agreement on mortgage?

-  recent changes in the credit laws?

-  reduction in utilzation /  paying down balances/ paying off cards in full

 

All of the above?

 

Thanks

*Bought 1st Home on 7/11/07 thanks to myFICO Forums*

4/2013 - FICO: 685
Payment History: Great
Amt of Debt: Not Good
Length: Good
Amt of New Credit: Good

Goal for 2013: Pay down debt! Cross fingers housing market turns around so I can move further south!



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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: CL's slashed

 


homerunstacy wrote:

What causes CL's to be slashed?

 

 - panic at seeing a new baddie   ie- 60 day late pay with paying partial per agreement on mortgage?

-  recent changes in the credit laws?

-  reduction in utilzation /  paying down balances/ paying off cards in full

 

All of the above?

 

Thanks


 

 

Well, IMO, the first one would definitely do it! That would certainly worry any lender about the borrower's ability to handle a high CL.

 

They might use the new law as an excuse, but I doubt that that would be the real reason.

 

As for the third, we've all read about this happening, but I think that what was happening is that the CCC was really unhappy about seeing balances carried for some length of time. When they see partial repayment, they drop the CL so that the balances can't go back up again. The way it looks to me is that they have decided that they really don't want this particular customer any more, or at any rate, they don't feel comfortable with allowing this customer to have higher CL's.

 

I've done several BT's with good-sized balances ($8K+), and I've never gotten AA when I've paid them down and off.

 

I do realize that these third case scenarios don't describe everyone, especially in the cases of the CLD's that were going on back during the first phase of the credit meltdown 18 months ago. But it does seem to match enough cases that I tend to believe that the CLD's are the result of the banks' discomfort with borrowers who've done a bit too much borrowing for their comfort level.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Regular Contributor
homerunstacy
Posts: 188
Registered: ‎01-12-2008
0

Re: CL's slashed

More specifics - 

DELL CL was originally $1500

Never late

Card open for 6 years

Carried a balance and could only make a min payments for the last few months

A couple weeks ago I made a $500 payment and they rewarded me by lowering my CL to just a few bucks above my balance

 

 

I plan to PIF next month and introduce it to my sock drawer.  I wish CC companies would alert you to credit limit decreases just  like they alert you to changes in terms.  Especially since it has an impact on your overall credit score.  Just when I though I was geting ahead with decreasing my balance they make me look like I am back at 90% util again!!! BOOOOOOOOOOOOOOOO 

 

 

*Bought 1st Home on 7/11/07 thanks to myFICO Forums*

4/2013 - FICO: 685
Payment History: Great
Amt of Debt: Not Good
Length: Good
Amt of New Credit: Good

Goal for 2013: Pay down debt! Cross fingers housing market turns around so I can move further south!



Valued Contributor
daisyduke
Posts: 1,320
Registered: ‎04-18-2009
0

Re: CL's slashed

hi homerunstacy,

I'm not sure if there is one answer, but I can only guess that it depends upon a couple of things: state of the CC issuer or even just the CC issuer, utilization and bad stuff hitting your CR. 

 

For example, I've read many posts about BOFA slashing  CL's as Forest Gump once said "For no particular reason at all".  I don't think I have seen one post on this board about a CU slashing someone's limit for "no particular reason".  My co worker missed his Macy's payment and they slashed his Visa limit from $1700 to $300, he was so shocked about this, yeah, they'll do that!  So if you are looking for more concrete findings, perhaps search the issuer of the card and see what they are doing to others...this might provide some sort of a baseline for you.

 

More obvious:  not using a major CC for a period of time you risk closure of an account.  I've read that HSBC has been known to close accounts for non usage.  A Charge off, or a Collection hitting your report, lots of inquiries, those sort of things I do believe scare current creditors, to which extent, we don't know (unless we work at that particular bank!)  

 

And a bit on utilization - I can tell you that I recently read that creditors do  not like to see 70% and above utilization (read a white paper from the fico.com website)  it's  warning sign to lenders and those who use credit to that extent have proven to be a bad risk, so many creditors want to try to mitigate the loss and take action.

 

I guess in today's climate, it's harder for lenders to determine who will default and who has less likely of a chance of defaulting. 


Starting Score: 682 EQ, 663 TU
Current Score: 687 EQ - 705 TU on 7/18/10
Goal Score: 700 + both EQ and TU


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Regular Contributor
homerunstacy
Posts: 188
Registered: ‎01-12-2008
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Re: CL's slashed

Ya haul.. I think you are probably right.  It's a shame because I had a pretty stellar credit record the last few years until I started the loan modification process.  We had no choice.  Had a reduction in my DH's household income and  was trying to protect us from futher damange before I started to have late pays across the board. I still think I made the right decision in the long run. 

 

I have had no other lates on my record for the past 6 years.   Have one 30 day late blemish 7 years ago but that should fall off soon.   Tried to GW but they didn't go for it.  In a couple more months I will be back at 0% util and will have hopefully worked through the restructure on the mortgage or at least resolved the outstanding balance one way or another.

 

FICO sim shows that if I pay down balances 80-100% my score should bounce back into the 700 club in the next 12 - 24 months.  Does that sound right even with the 60 day late pay?  

 

I guess we shall see what happens.  I'm not seeking any loans or new credit anytime soon.   I just want to do a better job at managing any debt and my score as best as I can.   Have made major cuts in our lifestyle and using whatever extra cash we can get to pay down debt and keep it down to offset the loss of household income. 

*Bought 1st Home on 7/11/07 thanks to myFICO Forums*

4/2013 - FICO: 685
Payment History: Great
Amt of Debt: Not Good
Length: Good
Amt of New Credit: Good

Goal for 2013: Pay down debt! Cross fingers housing market turns around so I can move further south!



Regular Contributor
homerunstacy
Posts: 188
Registered: ‎01-12-2008
0

Re: CL's slashed

DD - So far household has been kind to me over the years.   They were always one of my lowest int. rates and I have always maintained the same CL with them from the time I opened the card.  Never missed a payment.  They made good money off me too.  I have always carried a pretty high month to month balance with them.  No more though!   I guess I shall see how kind they are after I PIF next month.  I plan to continue to use them but just keep PIF'ing each month. Maybe let a single digit balance report here and there and see if that helps.

 

Home Depot still seems to be showing me the luv right now too.   Paid them off in full last month and still at a $5600 CL.   Maybe they have not caught wind of my mortgage baddie yet. =/         Cap 1, Chase,  BOA., Sears.. so far so good.   

*Bought 1st Home on 7/11/07 thanks to myFICO Forums*

4/2013 - FICO: 685
Payment History: Great
Amt of Debt: Not Good
Length: Good
Amt of New Credit: Good

Goal for 2013: Pay down debt! Cross fingers housing market turns around so I can move further south!



Valued Contributor
wmarat
Posts: 1,754
Registered: ‎11-03-2007
0

Re: CL's slashed


homerunstacy wrote:

What causes CL's to be slashed?

 

 - panic at seeing a new baddie   ie- 60 day late pay with paying partial per agreement on mortgage?

-  recent changes in the credit laws?

-  reduction in utilzation /  paying down balances/ paying off cards in full

 

All of the above?

 

Thanks


The mood of credit "analyst"

 

IN VINO VERITAS.
New Member
tlb63
Posts: 1
Registered: ‎03-15-2010
0

Re: CL's slashed

[ Edited ]

We have had an FIA card since 96. Have always carried a balance (I know-bad) but have recently committed to rehabilitation with cc's and so am paying all balances off, one card at a time.

 

Credit scores have been steadily increasing each month.

 

The last card with a high balance was FIA. Had a balance in the 8000's----CL9400.

Paid large payment one month, balance in the 6000's----CL decreased to 8400.

Paid couple of payments in one month the next month, balance down to 5000's----CL decreased to 6200.

After the last CL decrease noticed a 7 point drop in FICO score.

 

All CL dereases done with no notice or explanation. "For no particular reason" that I could see. Called to speak with credit analyst. Told him I was trying to get my utilization down and decrease my ratios to increase my scores. Of course he didn't care. The best he could come up with was that as far back as 8 yrs ago we had a few 30 d lates with them, and had one 30 d late in 2004.Thus he deemed us a risk.

 

None of the other cards I paid down decreased my CL.  In fact one of them raised it. This card is getting sock drawered.

 

Valued Contributor
Uborrow-Upay
Posts: 2,710
Registered: ‎10-16-2008
0

Re: CL's slashed

 


homerunstacy wrote:

More specifics - 

DELL CL was originally $1500

Never late

Card open for 6 years

Carried a balance and could only make a min payments for the last few months

A couple weeks ago I made a $500 payment and they rewarded me by lowering my CL to just a few bucks above my balance

 

 

I plan to PIF next month and introduce it to my sock drawer.  I wish CC companies would alert you to credit limit decreases just  like they alert you to changes in terms.  Especially since it has an impact on your overall credit score.  Just when I though I was geting ahead with decreasing my balance they make me look like I am back at 90% util again!!! BOOOOOOOOOOOOOOOO 

 

 


 

 

I have a commercial account with Dell, but I haven't used it in a while.  My limit was cut by $10,000 a while back, and I know it had nothing to do with my financial picture.

 

My Dell account was backed by CIT, which has had (and continues to have) its own problems, including bankruptcy.  

 

I don't know if the consumer account you have is backed by CIT, but if it is, this CLD you received may not have anything to do with you personally.  It might just be that the company can't afford to have the money out there anymore.

 

 

Regular Contributor
homerunstacy
Posts: 188
Registered: ‎01-12-2008
0

Re: CL's slashed

My Dell is listed with WEB Bank.  I think they bought up the CIT accounts from Dell a few years ago.

*Bought 1st Home on 7/11/07 thanks to myFICO Forums*

4/2013 - FICO: 685
Payment History: Great
Amt of Debt: Not Good
Length: Good
Amt of New Credit: Good

Goal for 2013: Pay down debt! Cross fingers housing market turns around so I can move further south!




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