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Senior Contributor
Posts: 4,694
Registered: ‎02-23-2011
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Re: What legal recourse is available when our bank reduces our credit limit?

[ Edited ]

cashnocredit wrote:

youngandcreditwrthy wrote:
Omg. That was one of those "interest only" loans.
It seems so tragic that bankers bet that home prices would just increase 30% a year eternally ...
What a house of cards.
And 1% increase on a $500,000 mortgage is a s*** ton. -.-

Oh, worse than that. It was a negative amortization loan. The payments were less than the interest and the difference got tacked onto an ever increasing principal. Until the 5 y reset. This was being done because home prices were so high it was the only way many people could buy.  It seemed risky then and now it just seems like we collectively went insane.

 


There were many who thought they would make substantially more money in the future, and felt they could afford the higher payments 5 or 10 years later.  I remember the period when people were afraid of being "priced" out of the market, habitually overbidding on properties.  Interest only loans were the only viable option to purchase a home, and meet higher payments later when income would also rise.

 

Of course, for many, the higher income never materialized, especially after 08 and 09.

Blogger
Posts: 3,355
Registered: ‎10-19-2012
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Re: What legal recourse is available when our bank reduces our credit limit?

The OP obviously has a reason to carry the big balance despite his apparent ability to pay it off. He makes almost 200k a year; he is not dumb. Whether he takes the debt to invest in a start-up business or to gamble, we don't know. It is unlikely that whatever he's spending money one does not easily justify a bank loan; hence he is taking credit card debt instead and hoping that the profit generated more than offsets the interest payment. This is why paying off his entire balance is out of the question. His end goal is not a good credit score.

 

The reason the OP's account got flagged was, ironically, because he paid off the balance. A big balance payment will set up an alert at Wells Fargo, triggering a manual review of his credit standing. Once a human being takes a look, there will be personal judgement calls. The OP carrying a large balance while having the financial means to pay it off may have sounded like a suspicious activity to the credit analyst reviewing his record. What exactly is in the credit analyst's mind we don't know; but whatever it is, he has a way to justify it. 

 

And the bad news to the OP is, Wells Fargo likely will side with the credit analyst, since they authorized him to make a professional decision. A call to Wells Fargo probably won't help unless the OP explains the reason for carrying the balance. Credit card issuers do not like to see consumers owing a lot of debt on their cards; credit card debt presents a much higher risk than bank loans. They probably will ask him why he is maintaining balances on other cards, and if he can't give a reasonable explanation, they won't budge. 

 

The only thing that can help the OP's situation is a balance transfer credit card which he can obtain with even a high utilization ratio. Such a card with a 10k limit will not only eliminate the negative impact of the closed WF account but also will give him the option of paying part of his balance at a much lower rate. Otherwise, other credit issuers may visit him soon due to the new, higher utilization ratio. 

Valued Contributor
Posts: 2,300
Registered: ‎01-22-2012
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Re: What legal recourse is available when our bank reduces our credit limit?


HiLine wrote:

The OP obviously has a reason to carry the big balance despite his apparent ability to pay it off. He makes almost 200k a year; he is not dumb. Whether he takes the debt to invest in a start-up business or to gamble, we don't know. It is unlikely that whatever he's spending money one does not easily justify a bank loan; hence he is taking credit card debt instead and hoping that the profit generated more than offsets the interest payment. This is why paying off his entire balance is out of the question. His end goal is not a good credit score.

 

The reason the OP's account got flagged was, ironically, because he paid off the balance. A big balance payment will set up an alert at Wells Fargo, triggering a manual review of his credit standing. Once a human being takes a look, there will be personal judgement calls. The OP carrying a large balance while having the financial means to pay it off may have sounded like a suspicious activity to the credit analyst reviewing his record. What exactly is in the credit analyst's mind we don't know; but whatever it is, he has a way to justify it. 

 

And the bad news to the OP is, Wells Fargo likely will side with the credit analyst, since they authorized him to make a professional decision. A call to Wells Fargo probably won't help unless the OP explains the reason for carrying the balance. Credit card issuers do not like to see consumers owing a lot of debt on their cards; credit card debt presents a much higher risk than bank loans. They probably will ask him why he is maintaining balances on other cards, and if he can't give a reasonable explanation, they won't budge. 

 

The only thing that can help the OP's situation is a balance transfer credit card which he can obtain with even a high utilization ratio. Such a card with a 10k limit will not only eliminate the negative impact of the closed WF account but also will give him the option of paying part of his balance at a much lower rate. Otherwise, other credit issuers may visit him soon due to the new, higher utilization ratio. 


I've seen many cases where people have high incomes, but don't necessarily have a good grasp of finances and/or credit. Being able to earn money is one thing, but being able to use what is earned wisely is something completely different.

 

Besides, of the 200k income the husband 188k and the wife earns virtually nothing. Is the OP the husband or the wife? If it's the latter, things become much much clearer.

 

Lenders can reduce your limits at any time, and hunting for some legal recourse is as wasteful with regards to time as it is stupid. There isn't much merit in the OP's post, and I highly doubt he/she will find something to the contrary. I sense that poor financial management choices are at fault here.

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Regular Contributor
Posts: 200
Registered: ‎02-20-2013
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Re: What legal recourse is available when our bank reduces our credit limit?

Doubt you have any kind of legal recourse.

 

But the reason for them doing it might depend. Did you have that 10k nearly maxed out or over 5k for a long period time? Perhaps they wanted to reduce your limit a long time ago but didn't because you already had so much debt. But once you paid it down they reduced as they wanted to, to prevent them from lending you that much money again. Its good that eveyrthing has been paid of on time. Something proberly changed in there decision making a while back, and once you were down to zero debt, they reduced your credit accordinly. An example might be if you had that debt since back when credit limits were high and easy to get, but didn't pay it down to zero until recently. But I have no clue what your history on that particular card is like, so my thoery might be irrelevant.


Moderator Emeritus
Posts: 10,932
Registered: ‎12-30-2011
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Re: What legal recourse is available when our bank reduces our credit limit?

Thread locked.

 

It's run it's course and the last few pages were removed as extraneous (charitably speaking).

 

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