49 Points from BOA reporting PIF

[Anonymous]

Ahhhh.  I see.  It may be then that the distinction you raised earlier is a pretty academic one.

I had said, based on listening to the story of our OP, that it showed how it could happen that a guy could wake up one day suddenly over 100% utilization.

It sounds like you are explaining that the way it actually plays out would be this: the issuer lowers the CL to a few dollars above the amount owed, and then if the statement generates (unluckily) a few days later, then at that point the interest pushes him to over 100%. 

I'm sure that's the way it works, but it probably doesn't have any practical effect on how it is perceived by the consumer: namely he wakes up one day and suddenly finds he is over 100% utilization.  Knowing that the CCC actually only lowered his CL to a few dollars above his amount owed probably won't comfort him much.

[NRB525]

Not so academic. The bank should not CLD below the existing balance.

If the reasons the cardholder then goes over the limit is due to:

1) No timely notification from the bank

2) The bank's known processes of posting interest on the statement

3) The timing of the CLD aligns with the statement

then the cardholder has very good reasons to complain first to the bank about any fees, and if no satisfaction there, then to the CFPB or the state attorney general. I usually get a good response out of otherwise non-responsive banks in the few instances where I had to include a copy of my letter to the AG to let the bank know where the info is going.

Yes, it is alarming to the typical cardholder if they get a CLD, but my advice is to realize that it is only money, and the cardholder is usually still within terms of the loan. It is stressful, but it's important to keep a longer term perspective on things, when determining what to do. Immediately trying to pay down the loan to lower utilization can be not the best thing if the bank continues to balance chase. By leaving the balance alone, the cardholder is essentially playing chicken with the bank. The money is already out of the bank. The cardholder is within terms, and as long as the cardholder remains within terms, can pay back the money in an orderly fashion. Yes, it has an impact on the FICO score, but with a substantial CLD, the cardholder needs to stop and think about everything affecting the FICO score, including how one got into a specific set of circumstances that leads to a CLD.

[Anonymous]

Note to the OP:

I suggest you continue to chat with NRB525 about this.  I based what I said on what you told us, but I think from his latest post he may be saying (to me) that the credit card issuer may have acted illegally by charging you immediate fees for the interest charge that quickly sent the amount owed over the limit.

Although you were the person who claimed that you were rudely surprised by a sudden 105% utilization, a part of your story I only repeated back to you, he's been directing his disagreement with the 99% vs. 100% issue to me.  He may be able to help you recover fees you were charged.  At any rate, his concern, such as it is, with the distinction between 99% vs. 100% may most profitably take the form of a conversation with you. 

It sounds like in the future you plan to keep your utilization fairly low, and thus protect yourself from this issue again (as well as prevent yourself from paying interest to credit card companies).  Sounds like a very reasonable plan.  Best of luck!

[Anonymous]

What timely notification?  Card holder agreements state pretty clearly the bank can lower your trade line at any time without notice.   Paid account, get over limit alert a few days later, login, see CLD, interest charged on remaining balance over the limit fee. 

If anything I trigged this paying the account close to the due date and when it would report to the CRA. So the trade reported as 105% util.  I did get the over the limit fee credited after PIF'd the trade line.  I had the money to pay off this and other trade lines, which I doing at the time. Again as the analyst said software can't see you doing that, thinks you're up to something sketchy and raises the alarm bell.

[NRB525]

Simply getting the overlimit fee credited was where I was going with the discussion. Yes the bank can change the terms on the cardholder, but if they want to maintain the relatiionship the CSR should be able to make minor concessions such as this, if the computer goes rogue. The situation with the AG was when Chase was trying to totally change the terms, gave an offer to pay it all off or get a 3.99% Forever APR turned into a 19% APR, which is when they got the class action lawyers sniffing around and decided that might not be such a good plan. They shifted to only making the minimum payment 5% of the balance.

And yes, OP, you were already in the act of, had a plan to, pay down the balances, so that is fine to continue. Others on other threads have been totally wigged out by the CLD and in my opinion were reacting too quickly. In my case, with several accounts over $20k balances at the same time, each getting CLD, on relatively low APR balances, my reaction to the CLD was... "Eh, whatever. I'll pay you back according to terms and live on my debit card for a while."

[CreditPhoenix]

I'm sorry, but the scoring model simply must change regarding payments in full.  People who pay all their bills on time should have the highest scores, period.  It's such a racket for the lending industry to consider someone untrustworthly unless they keep debt in their lives.

If someone takes out a loan that's too large for themselves, get mad at the bank first.  Only if the consumer can't pay it, then you can start docking his credit.  But until someone fails to pay a bill on time, that person should be an 850 with no ifs, ands, or buts.

[Anonymous]

Should we be rewarded for zero yet?  Sure, but from the bank's perspective which is to make money that's an unknown...they'd rather know you're a good borrower than a debt free PIF all your bills kind of person.  Silly isn't it?

[Anonymous]

Hi CreditPhoenix.  You are likely to get your wish in a few years.  Future FICO models (maybe FICO 10?) will likely begin rewarding people who pay their credit cards in full.  (PIF is a concept really for describing credit card debt, rather than installment debt, since it is contrasted with people who do not pay the full amount owed on each statement, the latter behavior being called "carrying" a balance.)

The reason that FICO has not done that before is not because they are involved in a racket (i.e.collusion with creditors to induce people to be in debt) but because until comparatively recently, the CRAs were not collecting the data needed to show whether or not a person had a habit of paying in full.  To do that, you need to know the amount owed on each statement and for that statement how much of it was later paid.  To do that for, say, 36 months requires recording 72 pieces of data.  But until recently, all the CRAs did was record the most recent recorded balance.  Thus the oft repeated mantra "FICO has no memory" when it comes to credit card utilization.  All it remember is what your most recent statement said. 

A number of studies have been done in the last few years, however, that show that people who ap their credit cards in full are much less risky than people who often carry a balance.  So FICO and Vantage will likely begin rewarding paying cards in full.

[CreditPhoenix]

Hi CreditGuyInDixie,

Sorry I never thanked you for your response until now.  I hope that the future models do exactly what you said.  I just opened a new credit card for no good reason whatsoever.  Er, I did it because it will hopefully raise my credit score from the 770's to the 800's.