Credit Limit Decrease For Not Spending...

Andy77 · ‎03-13-2016

I am very very happy to report in the next month I will be paying 88k of the total 93k I am in the hole for on my cards.

If I pay off this and don't use the cards a lot, would the credit card companies CLD me ? Does this happen ?

Now, stupid question...how do credit card issuers justify increasing limits if you, lets say have a 33k limit on a card, zero balance and you only charge and PIF 500.00 a month ? Why would they increase your limit ?

Thank you

NRB525 · ‎03-13-2016

Congratulations on the big pay down.

The CCC are more likely to CLD you if you have a high utilization on some cards, and the CCC gets spooked for some reason about your ability to pay. A CLD in that situation is their way of reducing risk, by not allowing you to borrow more from them.

In the worst-case scenario, the CLD turns into balance chasing: As you pay down a balance gradually, the CLD follows you right on down, so you never have an ability to take another increase. But the Worst Case scenario is relative. It's not the zombie appocalypse, it's just a CLD to reduce risk. You still just continue to pay within terms.

Once you start paying down, or reach a lower level of utilization, the CLD will stop. You won't know it has stopped until a few months later, when you look around and say "Hey, I haven't had a CLD in a while on this account".

And this depends a lot on how skittish the CCC is.

Which cards do you have with the high utilization now?

What is your intended pay-down pattern, which cards get paid off or down significantly?

Once you have a CL, and some basic level of activity, the CCC is not likely to CLD a low-utilization customer, because there is no risk to them until you actually start to borrow.

If you have a CC with $33k limit and charge $500 a month, what is the purpose of wanting a $40k limit?

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765

Anonymous · ‎03-13-2016

Credit card companies give credit to people who don't need it. If you have high utilization, they will steer away from you. If you apply a lot in a short period of time, they tend to steer away from you as well.

They dont one like taking chances.

Andy77 · ‎03-13-2016

Thanks for all the replies. Since I have never been CLD'd and I have a 7yr old BK and I am carrying 93k in debt and just about maxed everything out, I guess many lenders (barclays, bofa, citi, penfed, capital one) have faith in my abilities ha ha ha....I pay over the minimums every month and everything is on auto pay, shelling out about 2k a month.

So, I suppose lucky me for no CLD.

Your point of why would you need 40k if you have a 33k limit and are only charging 500.00 a month.....well, what if you wanted to make a very large purchase over the 33k

I guess what I am getting it as, if you don't heavily use your cards and PIF, how do you get higher limits ?

pizza1 · ‎03-13-2016

@Anonymous wrote:
Credit card companies give credit to people who don't need it. If you have high utilization, they will steer away from you. If you apply a lot in a short period of time, they tend to steer away from you as well.

They dont one like taking chances.

THIS..^^^^^

I clearly dont need need the credit or CLI on any of my cards, but yet...they keep rising. I PIF monthly and may only charge $10 here, $150 there, and not EVEN close to the limit by thousands of dollars. when your util is 0.00001 (fico rounds up to 1% regardless)....the CCC arent really scared of that, and see that you can handle a ton of credit 2-5X your income, and be good.

I very much agree with your comment. but, my personal opinion as well.

Andy77 · ‎03-13-2016

Pizza...Did you file ch7 in 2013 ? and ALREADY have 239k in avail credit ?

If so, how is that possible ?

pizza1 · ‎03-13-2016

@Andy77 wrote:

Pizza...Did you file ch7 in 2013 ? and ALREADY have 239k in avail credit ?

If so, how is that possible ?

yep sure did, and sure do. Where have you been the last 2 1/2 years here on MFF! LOL...

A lot of persistance, and INQ...LOL...It didnt happen overnight...

Andy77 · ‎03-13-2016

Wow...that is great....KUDOS to you !!!!!

well I imagine if I pay off this chunk of debt then don't get more INQ and the ones I have fall off I will be on my way for higher limits.

I am sure a lender like Penfed though will force me to app for an increase...but maybe I will be wrong ....

pizza1 · ‎03-13-2016

@Andy77 wrote:

Thanks for all the replies. Since I have never been CLD'd and I have a 7yr old BK and I am carrying 93k in debt and just about maxed everything out, I guess many lenders (barclays, bofa, citi, penfed, capital one) have faith in my abilities ha ha ha....I pay over the minimums every month and everything is on auto pay, shelling out about 2k a month.

So, I suppose lucky me for no CLD.

Your point of why would you need 40k if you have a 33k limit and are only charging 500.00 a month.....well, what if you wanted to make a very large purchase over the 33k

I guess what I am getting it as, if you don't heavily use your cards and PIF, how do you get higher limits ?

Not meaning this disrespectful in any way, but...you have a BK7 on file, regardless if its 7yro or not, and MAX util of 95-99%?? eek!! How did that happen?

Anyway...Lenders arent gonna raise your limits when youre that far in debt across the board...

Andy77 · ‎03-13-2016

I am well aware that my debt is WAY too high and looks terrible. This happened because I started a business and have not made any money yet, this takes a few years.

I always had collateral farmland worth way over the debt I was carrying and just recently the farmland sold so I will now be debt free, minus the 5k I am not paying off right now.