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Valued Contributor
maiden_girl
Posts: 2,095
Registered: ‎12-29-2011
0

Re: Stupid Question #1

[ Edited ]

McArthur wrote:

maiden_girl wrote:

I agree with the others. I saw my FICO score drop significantly when I reported a balance on 5 credit cards....at the same time! LOL. I'm able to pay it back...I just wanted to show usage but I didn't realize the affect it would have on my FICO until...well after the fact.

 

I say that if you do rack up a balance on a card with a 10k limit...have lots of available credit to keep your UTL low. Also pay more than the min so you don't freak the credit card company out thinking you won't pay them back.


Why should the credit card company freak out if I am using exactly what they said I can use and paying back exactly what their agreement said I can pay?

 

Dont get me wrong.  I agree with what you have written.  It's just that the vast majority of credit card users are not as sophisticated as we are.  Credit card company's should be the prime educators, but they are not.  At all.

 

 


Because it shows credit responsibility. Give alot..but take a little... in simple terms. Lol.

The truth is out there...
FICO scores: 758 (EQ) 741 (EX) 768 (TU) 8/14 | Goal score: 750+ (all 3)
Tradelines: Capital One QS NPSL (5.0k) | Discover IT (6.0k) | Walmart Discover (5.0k) | Chase Freedom NPSL (7.3k) | Citi Simplicity (9.3k)






Valued Contributor
visorboy1974
Posts: 1,132
Registered: ‎05-17-2010
0

Re: Stupid Question #1


McArthur wrote:
 I have seen scores of cases where people have had all their cards maxed out, never missed payments and then had a lender take AA.  The resulting chain reaction of over limit fees, account closures, high util, penalty interest and even further AA from additional lenders pushed them to where now they can't make payments.  

 

Sometimes I think lenders are directly responsible for pushing good people into financial ruin via a system of smoke and mirrors.


Think of it this way...each CC issuer wants you to use their card.  So they'll give you whatever limit they think is comfortable for you to use.  For some lenders, it's matching your highest CL.  For others, it's giving you $500 and that's it.  If you go and max out your favorite credit card because you're charging all of your daily expenses to it and that's all, it's fine, as long as you show progress in paying it off.  If you go max it out and then pay the min payment and move on to the next card and do the same, it shows a concerning trend.        

 

For example, let's just say I have over $100K in limits as well as a $50K car loan, but I don't make $100K.  If my CC issuers see me anywhere near 50% UTIL, I wouldn't be surprised to see a CLD because it doesn't look like I'm living within my means.  Lots of factors go into this.     

Regular Contributor
McArthur
Posts: 249
Registered: ‎12-24-2012
0

Re: Stupid Question #1


visorboy1974 wrote:

McArthur wrote:
 I have seen scores of cases where people have had all their cards maxed out, never missed payments and then had a lender take AA.  The resulting chain reaction of over limit fees, account closures, high util, penalty interest and even further AA from additional lenders pushed them to where now they can't make payments.  

 

Sometimes I think lenders are directly responsible for pushing good people into financial ruin via a system of smoke and mirrors.


Think of it this way...each CC issuer wants you to use their card.  So they'll give you whatever limit they think is comfortable for you to use.  For some lenders, it's matching your highest CL.  For others, it's giving you $500 and that's it.  If you go and max out your favorite credit card because you're charging all of your daily expenses to it and that's all, it's fine, as long as you show progress in paying it off.  If you go max it out and then pay the min payment and move on to the next card and do the same, it shows a concerning trend.        

 

For example, let's just say I have over $100K in limits as well as a $50K car loan, but I don't make $100K.  If my CC issuers see me anywhere near 50% UTIL, I wouldn't be surprised to see a CLD because it doesn't look like I'm living within my means.  Lots of factors go into this.     


Perfectly understandable.

 

Now why would a creditor give someone a high limit knowing all the available credit one already has?  

 

I am just playing Devil's Advocate here.  Sometimes I think it's like giving someone a loaded gun knowing they can use it and play Russian Roulette.  

 

This all started in the other thread with you-know-who.  Someone mentioned he could be a troll and in my mind I found myself agreeing.  Now, though, I am starting to think he is just your average credit consumer who just doesn't understand that the rules aren't really the rules.  We are just lucky to be the enlightened ones.

Valued Contributor
visorboy1974
Posts: 1,132
Registered: ‎05-17-2010
0

Re: Stupid Question #1


McArthur wrote:

Perfectly understandable.

 

Now why would a creditor give someone a high limit knowing all the available credit one already has?  

 

I am just playing Devil's Advocate here.  Sometimes I think it's like giving someone a loaded gun knowing they can use it and play Russian Roulette.  

 

This all started in the other thread with you-know-who.  Someone mentioned he could be a troll and in my mind I found myself agreeing.  Now, though, I am starting to think he is just your average credit consumer who just doesn't understand that the rules aren't really the rules.  We are just lucky to be the enlightened ones.


If you have a bunch of cards with $10K limits, would you really use one with a $500-$1000 limit?  You'd probably be insulted unless you're getting 10% cash back or something.  In order to compete, creditors have to at least come close to other limits.  And sometimes it's not the case...they will give you $1000 CL and just be done with it.    

Regular Contributor
bigman023
Posts: 249
Registered: ‎05-15-2009
0

Re: Stupid Question #1

Theres a few things that I would like to know about AA taken by CCC.

 

1. If they approve you for a card with a promo, like 0% APR, would they able to, for example, close your account and end the promo APR, if their only reason was that they got spooked by someone using 90% of their util on their new card.

 

 

2. Are CCC's less likely to get spooked if you, tell them at the time you get the card that you plan to use the credit right away and carry a balance for a while because you are doing something like a home improvement project, and what the card specifically for this use.

 

I guess what Im really asking is, if theres a limit on what CCCs can do when they get spooked, and is there anything consumers can do before hand, to prevent the CCC from getting spooked.

5/2009 EQ-504(FICO), TU98-567(FICO), EX- 503 (FAKO)
10/17/11 EQ-633, TU04-652, EX-681 All lender Pulls
10/17/11 TU98-678
12/21/2012 TU98-677 (39% Util)
01/21/2012 EQ - 661 (37% Util) SW Alert
Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
0

Re: Stupid Question #1


McArthur wrote:

Why is it not good to use what a lender gives you under the terms the lender set? On another thread a poster was asking about possible AA for being maxed out in all of his cards. We all know and accept, albeit reluctantly, that this makes a lender nervous.

 

But why?

 

Chase, for example, gives you a $10k limit and you buy something for $9,999. When you opened the account Chase told you that you were supposed to make at least minimum payments. You do.

 

Why do they give you $10k and then penalize you for using it? If you come to my house and I put a glass of water and three apples in front of you, should I get upset because you eat all the apples and drink all the water?

 

If Chase wants you to only spend 1/3 of your limit, then shouldn't they give you a limit of $6,666 instead of $10,000?


I think if you PIF the balance, it is rarely a problem.   Those are good customers in most Creditors eyes.   If you have 0% interest deal and only pay the minimum, that rarely causes a problem, since those deals are designed for you to pay minimum payment and they hope you keep the balance past the deadline and pay lots of interest. 

 

People who max out their cards and pay high interest charges each month for long periods are suspect.  

Regular Contributor
McArthur
Posts: 249
Registered: ‎12-24-2012
0

Re: Stupid Question #1


Wolf3 wrote:

McArthur wrote:

Why is it not good to use what a lender gives you under the terms the lender set? On another thread a poster was asking about possible AA for being maxed out in all of his cards. We all know and accept, albeit reluctantly, that this makes a lender nervous.

 

But why?

 

Chase, for example, gives you a $10k limit and you buy something for $9,999. When you opened the account Chase told you that you were supposed to make at least minimum payments. You do.

 

Why do they give you $10k and then penalize you for using it? If you come to my house and I put a glass of water and three apples in front of you, should I get upset because you eat all the apples and drink all the water?

 

If Chase wants you to only spend 1/3 of your limit, then shouldn't they give you a limit of $6,666 instead of $10,000?


I think if you PIF the balance, it is rarely a problem.   Those are good customers in most Creditors eyes.   If you have 0% interest deal and only pay the minimum, that rarely causes a problem, since those deals are designed for you to pay minimum payment and they hope you keep the balance past the deadline and pay lots of interest. 

 

People who max out their cards and pay high interest charges each month for long periods are suspect.  


If you PIF with, say, Chase, then there likely wouldn't be an immediate problem with Chase.  However, Citibank doesn't know that you PIF'd Chase.  All they know when they soft you is that you are maxed out on Chase and that could make them take AA against you. 

 

Now, assuming that you have a $10k CL at each of 3 banks and are only maxed out at Chase, when Citibank closes your account your UTIL goes from 33% to 50%.  Maybe your third bank gets scared when they see this and also takes AA.  Hopefully Chase will still stick with you.  Hopefully.

 

Of course *WE* understand this.  But your average consumer does not.  I guess I'm just trying to point out that a credit card issuer should be responsible to educate their customers and spell out the rules by which they can take AA against you.  Right now, I know of none that do that.


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