Any harm in requesting a CLD?

Gunnar419 · ‎04-21-2014

I find myself with more credit than I really want, about double my annual income (which isn't huge). I know that a lot of you would be just fine with that, but it makes me uncomfortable. Not because I might overuse my credit. I wouldn't. But I do worry that I could be denied credit in the future or be CLD'd at a bad moment by the "wrong" lender because of having so much available.

I'm thinking about asking for a voluntary CLD on a card of my choice (specifically my Amex BCE, which I don't have much use for).

My util is under 4%, so it's not going to hurt me there.

Would there be any negative on either my CRs or my score from a customer requested reduction? Would it look bad in any way.

Revelate · ‎04-21-2014

Not certain, if your high balance > your new CL might raise some eyebrows, but I have that situation with my BOFA card and it hasn't apparently hurt me with Amex nor Chase nor FIA and the rest of the lenders are probably similiar if I cared about them.

I'll be honest, I think you should wait on this one if doing it at all: in general people's income goes up over time (remember this is a long term adventure!) and having the higher tradelines generally only helps.

Simply seems counter-productive to take a voluntary CLD though I agree that there's like a "maximum exposure" guideline somewhere in lender's underwriting, but usually this is for an individual lender instead of in aggregate in my opinion, and under the current market conditions where everyone is trying to take each others' customers, I don't think it'd matter much. If we get another mortgage crisis or similar it might be more applicable... though the more I think about it, if I were writing a customer risk assessment algorithm a sudden reduction in CL on a tradeline by any lender (which would be assumed to be AA) would at least be a trigger for a review: if one antelope starts running, there's probably a lion around, so the rest of the herd starts running too: I have a sad suspicion lenders would be similar.

In short, think the negatives outweigh the positives, and I'd be really leery of doing something like this personally. Everything could go OK but I'm more paranoid than most I guess having worked at a few lenders and I don't see this as being worth the risk after further reflection.

ETA: I do agree with your premise, I realized after chasing a 3rd 3X CLI chance with Amex that there really wasn't any point: my current BCP CL is extradonarily large in comparison for what I actually need the tradeline for (which is realistically at most 1-2K a month in the future presuming theoretical wife/kids) and I won't be taking that shot again I don't think; better use elsewhere at my usual income level for chasing CLI's / new accounts now. I'm not going to slash the current tradeline at 9K though to be more commeasurate with my expected use case though, just don't like that idea and the 9K tradeline will help me in the future undoubtedly and already has with both Chase and FIA I suspect.

Gunnar419 · ‎04-21-2014

Thank you for the very thoughtful answer, Revelate.

That's a good point (and well said) about the antelope herd! Also you made a good point that right now lenders are all back to offering high CLs to attract each others' customers, so my situation might not seem alarming. It seems like 2007 all over again, doesn't it?

I do worry about an algorithm saying, "Whoa, that's just too much overall exposure!" But you're probably right that for now the risks of asking for a CLD outweigh the benefits.

Fortunately, I don't have any high balances. My one reporting card has 20% on it (BT balance at 2.99%). Everything else is reporting zero. I do plan some home improvements this summer that are going to be big, but with the amount of credit I now have even those aren't going to push any one card above 50%.

I'm glad to know you've considered something similar. Frankly, I expected a flurry of responses telling me nothing more than I'm an idiot for even thinking about WANTING a CLD.

My other option is just to close the BCE. But the backdate on that makes me look like I've had credit since the age of the dinosaurs and I wouldn't like to think about losing that, not even 10 years from now.

NikoD · ‎04-21-2014

FYI I'm no expert by any means. This is just how I see it:

By successfully managing high CLs for a long period of time you are demonstrating that you are a responsible borrower over the long haul. This may come in handy with lenders in the future. Would you rather lend money to someone who has demonstrated for the last 10 years that they can manage $25K CLs or someone who in the last ten years has only had access to 5K CLs?

user5387 · ‎04-21-2014

I think it's a good idea to make credit adjustments to optimize FICO scoring.

But it seems like kind of a dubious idea to make adjustments to please specific underwriters and lenders who may or may not exist.

If you know of specific lenders who you plan to apply to, and they would treat you more favorably after some CLDs, then it might make sense.

But I don't think I'd request CLDs just because the idea sounds desirable in theory.

There are a variety of long-term advantages in maintaining high CLs, and I think these greatly outweigh the disadvantages.

Gunnar419 · ‎04-21-2014

Okay, you guys are smarter than I am. You've all raised points I hadn't thought of -- and good ones, too.

It's very true that I'm trying to come up with a solution for a problem that's entirely hypothetical. You caught me. I do that.

ways2go · ‎04-21-2014

I could only think of doing CLD or even closing an account, only if you were going for a mortgage and the lender thinks you have too much credit available and would want you to close some in order to get a mortgage.

eagle2013 · ‎04-21-2014

Great responses. I had similar concerns about my current exposure, particularly how my highest limit (SD WF) impacted my ability to get higher, more useful limits with other lenders.

takeshi74 · ‎04-22-2014

@Gunnar419 wrote:
My other option is just to close the BCE. But the backdate on that makes me look like I've had credit since the age of the dinosaurs and I wouldn't like to think about losing that, not even 10 years from now.

With backdating you can add an AmEx card at any point in the future to gain another tradeline with the same age.

Gunnar419 · ‎04-22-2014

@ways2go wrote:
I could only think of doing CLD or even closing an account, only if you were going for a mortgage and the lender thinks you have too much credit available and would want you to close some in order to get a mortgage.

Another good point, and I'm not going to be doing that. In fact, for the home improvements I need I was thinking about a small mortgage from my local bank, but then I realized I could use my high credit card CLs + balance transfers and get things done without all the upfront costs and even with lower interest for several years.

I can do the the biggest part of the work this year without ever putting any individual card over 50% and without going over 20-25% total util. In one way, that's another good reason not to ask for a CLD, bout it still makes me worry that one of the lenders will see my new roof as an abnorbal spending pattern and will freak out and start Revelate's antelope herd running.