topic Re: Help! Credit limit drastically slashed in Credit Cards

Help! Credit limit drastically slashed

Anonymous — Sat, 08 Jun 2019 20:29:41 GMT

I have had 2 Bank of America credit accounts for 3-5 years. I was forgetful and basically forgot my payments until around when the next next month’s were due. Without notice they significantly cut my credit limit . I’m sure this is ignorant of me, but I literally had no idea they could do something like this and I feel sick to my stomach because my credit utilization went from 30% to ~99% overnight.

Account 1: Balance 12,090. Limit was 30,000, now 12,100.

Account 2: Balance 3538. Limit was 20,000, now 3,600.

I have other cards too. My overall utilization went from ~35% to 55%

What do I even do to recover from this?

Re: Help! Credit limit drastically slashed

thornback — Sat, 08 Jun 2019 20:51:52 GMT

Well since it seems you were more than 30 days late (or was it 60 days?) you'll also have a late payment hit on your reports to deal with - and it will take approx 2 years for your scores to recover from that alone.

Unfortunately there's not much you can do at this point... As you pay the balances down, BOA is likely going to balance chase you, lowering your limits after each payment to prevent you from making more purchases. And once the balances are paid, it's quite possible they'll close both accounts.

If you have the funds to pay both balances in full now, you can do that then immediately contact them to try to save the accounts from closure - tho I don't know how successful that attempt will be.

To avoid this from happening in the future, you should set all of your accounts to autopay at least the minimum due each month so even if you forget to manually make a payment, the autopay will kick in so the required minimum is paid to keep you current.

Perhaps someone that's had a similar experience with BOA will chime in with additional advice or a more concrete idea of what to expect.

Re: Help! Credit limit drastically slashed

Anonymous — Sat, 08 Jun 2019 21:18:26 GMT

@thornback wrote:
Well since it seems you were more than 30 days late (or was it 60 days?) you'll also have a late payment hit on your reports to deal with - and it will take approx 2 years for your scores to recover from that alone.

Unfortunately there's not much you can do at this point... As you pay the balances down, BOA is likely going to balance chase you, lowering your limits after each payment to prevent you from making more purchases. And once the balances are paid, it's quite possible they'll close both accounts.

If you have the funds to pay both balances in full now, you can do that then immediately contact them to try to save the accounts from closure - tho I don't know how successful that attempt will be.

To avoid this from happening in the future, you should set all of your accounts to autopay at least the minimum due each month so even if you forget to manually make a payment, the autopay will kick in so the required minimum is paid to keep you current.

Perhaps someone that's had a similar experience with BOA will chime in with additional advice or a more concrete idea of what to expect.

+100

Everything said above. You’re being balance-chased. If you have the money to pay off these accounts, call BofA & plead your case to a supervisor BEFORE you pay. Not sure if you will have any success, but it’s worth a shot.

no matter what, you need to pay these down ASAP, as your UR Is going to hit your scores hard.

Re: Help! Credit limit drastically slashed

HighAchiever — Sat, 08 Jun 2019 21:24:34 GMT

I'm sorry to hear of your troubles and agree with thornback , you may have a chance if you are able to pay off the balances and contact someone... good luck!

Re: Help! Credit limit drastically slashed

Anonymous — Sat, 08 Jun 2019 21:27:08 GMT

I actually don’t know if it was even 30 days. My Credit Karma account shows Bank of America reporting all payments were made on time, so I think it may have been <30 days late when I paid. So basically there’s is no way to get them to re-increase my limit? I basically paid the lower one down with about $100 balance remaining. Tried to increase credit limit on website and they are sending mail which means it was denied

Re: Help! Credit limit drastically slashed

thornback — Sat, 08 Jun 2019 21:38:50 GMT

Well if you weren't actually 30 days late yet then that's good news... saves you from negative credit reporting which is much more difficult to overcome. However, internally with BOA, you were late.

I would probably call BOA since one account has just been down... your length of history with them is decent, so you never know, they may be will to work with you & keep your accounts open at the reduced limit - but i wouldn't expect a CLI anytime soon - you'll be on probation for a while.

@Anonymous wrote:
I actually don’t know if it was even 30 days. My Credit Karma account shows Bank of America reporting all payments were made on time, so I think it may have been <30 days late when I paid. So basically there’s is no way to get them to re-increase my limit? I basically paid the lower one down with about $100 balance remaining. Tried to increase credit limit on website and they are sending mail which means it was denied

Re: Help! Credit limit drastically slashed

Anonymous — Sat, 08 Jun 2019 23:56:22 GMT

@Anonymous wrote:
I actually don’t know if it was even 30 days. My Credit Karma account shows Bank of America reporting all payments were made on time, so I think it may have been <30 days late when I paid. So basically there’s is no way to get them to re-increase my limit?

Unfortunately, that's not the immediate goal: you are being balance chased, which means each time you pay, the bank will reduce the CL to just above the remaining balance, until they close the card. So that is what the advice above was meant to help with. If you have paid one card much more down, you a) could have made them happier so they are more likely to listen, or b) weakened your position dramatically (they now have a lot of their money) and they proceed as planned!

So talk to them ASAP to see what can be done.

Re: Help! Credit limit drastically slashed

Anonymous — Sun, 09 Jun 2019 00:04:52 GMT

Sorry to say but you’re better off paying the cards off, closing them, and finding another lender. BoA won’t trust you again for a long time, possibly years on these accounts.

Re: Help! Credit limit drastically slashed

CreditInspired — Sun, 09 Jun 2019 00:20:49 GMT

@Anonymous wrote:
I have had 2 Bank of America credit accounts for 3-5 years. I was forgetful and basically forgot my payments until around when the next next month’s were due. Without notice they significantly cut my credit limit . I’m sure this is ignorant of me, but I literally had no idea they could do something like this and I feel sick to my stomach because my credit utilization went from 30% to ~99% overnight.
Account 1: Balance 12,090. Limit was 30,000, now 12,100.
Account 2: Balance 3538. Limit was 20,000, now 3,600.

I have other cards too. My overall utilization went from ~35% to 55%
What do I even do to recover from this?

Hi and welcome to MyFICO

Yes, banks will take AA without notice when they don't receive the minimum monthly payment due. Was this your first late or have you been late before? If it was the first and only one, you can always call and plead your case--fall on their mercy. However, if it's not the first one, IDK, BOA is a very conservative bank and may view you as habitually late.

Your only other recourse is to get those outstanding balances paid down and PIF as quickly as possible because I believe you will be balanced chased from here on out.

I know this is a tough lesson learned, but do learn from it. You must make your monthly minimum payments by the due date. If you are paying late on your other cards, take steps to correct that now so other lenders wont follow suit.

Re: Help! Credit limit drastically slashed

sarge12 — Sun, 09 Jun 2019 00:53:21 GMT

@Anonymous wrote:
I have had 2 Bank of America credit accounts for 3-5 years. I was forgetful and basically forgot my payments until around when the next next month’s were due. Without notice they significantly cut my credit limit . I’m sure this is ignorant of me, but I literally had no idea they could do something like this and I feel sick to my stomach because my credit utilization went from 30% to ~99% overnight.
Account 1: Balance 12,090. Limit was 30,000, now 12,100.
Account 2: Balance 3538. Limit was 20,000, now 3,600.

I have other cards too. My overall utilization went from ~35% to 55%
What do I even do to recover from this?

They could do something like this for any reason or even no reason at all. Credit cards and the corresponding credit limits are not a right, and the issuer or the holder of the card can terminate the relationship at any time. It is why, among other reasons, I always PIF. If you do that, balance chasing, CLD, or even card closure, will not adversely affect your credit score much. Reduced credit limits are not always a result of an action by the card holder. It can happen when an issuers internal audit indicates a need to reduce their risk across the board, or in one segment. There are low risk segments, medium risk segments, and high risk segments. The majority of profit is derived from the medium risk segment on most cards, so they may try to reduce exposure to even the low risk segment to increase profit. Some lower teir cards are catering to the high risk consumers and has the high fees and interest to make a huge profit even when their default rate is high. Some very high teir cards are practically risk free, and amazingly sometimes have very high fees as well, but unique rewards and benefits to appeal to wealthy card holders.

Re: Help! Credit limit drastically slashed

sarge12 — Sun, 09 Jun 2019 01:02:41 GMT

@Anonymous wrote:
@Anonymous wrote:
I actually don’t know if it was even 30 days. My Credit Karma account shows Bank of America reporting all payments were made on time, so I think it may have been <30 days late when I paid. So basically there’s is no way to get them to re-increase my limit?
Unfortunately, that's not the immediate goal: you are being balance chased, which means each time you pay, the bank will reduce the CL to just above the remaining balance, until they close the card. So that is what the advice above was meant to help with. If you have paid one card much more down, you a) could have made them happier so they are more likely to listen, or b) weakened your position dramatically (they now have a lot of their money) and they proceed as planned!
So talk to them ASAP to see what can be done.

Now I have a question...could it be beneficial to actually close the account even with a balance, but continue to pay it as agreed? Since it would no longer be an open account would doing so remove it from being figured into revolving utilization or would the balance still be figured in, but not the credit limit?

Re: Help! Credit limit drastically slashed

HighAchiever — Sun, 09 Jun 2019 01:16:51 GMT

I don't think so, because I believe a closed account with a balance is factored into the algorithm as if it is a maxed out account at 100% vs a lower percent of the available limit of an open account. Hopefully someone else can respond to verify...

Re: Help! Credit limit drastically slashed

Brian_Earl_Spilner — Sun, 09 Jun 2019 01:21:18 GMT

It still counts, just like a collection. It will also affect DTI still.

Re: Help! Credit limit drastically slashed

Remedios — Sun, 09 Jun 2019 01:26:33 GMT

@HighAchiever wrote:
I don't think so, because I believe a closed account with a balance is factored into the algorithm as if it is a maxed out account at 100% vs a lower percent of the available limit of an open account. Hopefully someone else can respond to verify...

That depends on who you ask

Some believe that closed accounts in good standing are not scored at 100% utilized . More like the utilization (the dollar amount) counts against aggregate utilization, but limit is no longer counted towards it. If account is closed as a result of AA and issuer is not even reporting what the limit was, then it's utilized at 100%.

Others believe every closed account is considered to be 100% utilized.

It's still a sore topic, many threads in scoring forum can attest to that lol

Re: Help! Credit limit drastically slashed

Anonymous — Sun, 09 Jun 2019 02:56:50 GMT

Good to know. Thanks

Re: Help! Credit limit drastically slashed

Shooting-For-800 — Sun, 09 Jun 2019 12:58:48 GMT

Call them.

Call them again.

Email them.

Email everyone on the planet with a BOA address.

Mail them.

Mail everyone.

Explain the simple mistake and beg for forgiveness and your CL restored.

Can't hurt. GL!

Re: Help! Credit limit drastically slashed

NRB525 — Sun, 09 Jun 2019 13:20:19 GMT

@Remedios wrote:
@HighAchiever wrote:
I don't think so, because I believe a closed account with a balance is factored into the algorithm as if it is a maxed out account at 100% vs a lower percent of the available limit of an open account. Hopefully someone else can respond to verify...
That depends on who you ask

Some believe that closed accounts in good standing are not scored at 100% utilized . More like the utilization (the dollar amount) counts against aggregate utilization, but limit is no longer counted towards it. If account is closed as a result of AA and issuer is not even reporting what the limit was, then it's utilized at 100%.

Others believe every closed account is considered to be 100% utilized.

It's still a sore topic, many threads in scoring forum can attest to that lol

I do not believe a closed account trips into "100% utilization" by default. There is a thread in the Understanding FICO Scoring board, where I added an experiment late in 2018. I BT'd a $500 card to 90%, and a larger card over 50%, while I have a closed card at around 10% utilization. The score was impacted by the other two cards, then recovered when the two cards had utilization reduced. If the closed card were counted at 100% utilization, my score would already be tanked by that. I am at around 830 consistently these days.

In the case of OP, with the balance chasing, the cards are nearly maxed out anyhow. Closing them will not remove the maxed out situation, so no, closing the card won't help utilization, but what I'm saying is, if a card is in low utilization, closing it with balance won't make it 100% utilization. If the card is at 99% utilization, open or closed, that's the reality. My situation is different (and some other closed cards can be) where the utilization on that card is in the range of 10% or less.

FWIW I was balance chased by BofA on two large balance cards. They kept following me down, as I made minimum / more than minimum payments as part of my overall pay-down of debt. Every few months I'd get a letter with the limit decrease notice. After the balances came down to a level BofA was happy with, the balance chasing stopped. I knew this finally because one of the cards ended up getting a $4,000 auto CLI one day.

Re: Help! Credit limit drastically slashed

K-in-Boston — Sun, 09 Jun 2019 15:50:46 GMT

Just to chime in on closed accounts with balances, it can go one of four ways. It depends on how the lender reports the balance and available credit on the closed account. It will differ by lender, so there is no one size fits all answer for that. That’s why there are disagreements on these forums about what happens; everyone is right yet no one is wrong when it comes to this.

I would advise against ever closing an account with a balance. Sometimes lenders make that choice for you, though. The worst case scenario is that a balance is reported with a $0 credit line, which means the balance is factored into your overall ultilization but the credit line is not. FWIW all BoA accounts that I have closed (without a balance and in good standing) continued to report the original credit line.

Re: Help! Credit limit drastically slashed

Revelate — Sun, 09 Jun 2019 18:22:43 GMT

Not to argue but a single maxed out tradeline that doesn’t materially impact aggregate utilization isn’t a big deal.

Once upon a time when I tested on EQ FICO 8 it was -7 at $240/250.

Didn’t get any further cause Discover graduated me .

Given that any credit card balance that is accruing interest is financial bleeding, address it anyway. Scoring impact is intellectual proverbial self-gratification in comparison I would suggest... admittedly I engage in that a lot on this forum but assuming it’s your highest APR card start paying it down, and if it’s not pay down something else first and get to it eventually imo.

Re: Help! Credit limit drastically slashed

Anonymous — Sun, 09 Jun 2019 21:59:01 GMT

I would strongly encourage you to call them, explain what happened and tell them you will schedule automatic payments to ensure this never happens again. I doubt you will get your limits back but the goal is to not get the cards cancelled. Lenders get nervous when they see a combination of high utilization and slow or late payments. I would absolutely ask them how late you were. If they are not 30 days or more than you can recover fairly easily (not limits but overall scores and profile).

The best thing to do is call, learn the exact information, explain to them what happened and what your doing to ensure it never happens again and then see what if anything they do.