topic Re: Overlimit Penalty two part question in Understanding FICO® Scoring

Overlimit Penalty two part question

sznthescore — Wed, 10 Aug 2022 15:18:27 GMT

I slipped over my credit limit on one of my credit cards... (Gas purchase). It caused me to take a hit in my FICO scoring.

My question is:

1) Will I be penalized for 7yrs for this occurrence?

2) Will I be penalized in High Credit section (being over the limit) vs. Credit Limit for credit scoring purposes even though I'll get the balance back down under the limit?

Re: Overlimit Penalty two part question

Remedios — Wed, 10 Aug 2022 15:29:44 GMT

Why would you be penalized for 7 years? It's not a derogatory information.

You can expect scoring loss, a serious one since it appears you're rebuilding again (higher penalty for high utilization on dirty files) but that's only till the card reports again next month

Re: Overlimit Penalty two part question

Brian_Earl_Spilner — Wed, 10 Aug 2022 15:54:50 GMT

Something to keep in mind is it will be recorded as your high balance. Lenders who track that information like discover or NFCU could use it as a reason to decline. For example, NFCU would decline a CLI and say something like too soon since last over limit.

Re: Overlimit Penalty two part question

SouthJamaica — Wed, 10 Aug 2022 18:43:02 GMT

@sznthescore wrote:
I slipped over my credit limit on one of my credit cards... (Gas purchase). It caused me to take a hit in my FICO scoring.
My question is:

1) Will I be penalized for 7yrs for this occurrence?

2) Will I be penalized in High Credit section (being over the limit) vs. Credit Limit for credit scoring purposes even though I'll get the balance back down under the limit?

1. I'm not aware of any negative in your report as a result of that, so no.

2. It will stay in your report as your "high credit" but I'm not aware of that having any scoring effect.

Re: Overlimit Penalty two part question

sznthescore — Wed, 10 Aug 2022 20:56:36 GMT

Thank you all for the replies and information. I'll fix NFCU (which is the card in question) by increasing the credit limit myself since its a secured card to offset the High Credit situtation that will be reported.

Re: Overlimit Penalty two part question

Remedios — Thu, 11 Aug 2022 03:08:37 GMT

@sznthescore wrote:
Thank you all for the replies and information. I'll fix NFCU (which is the card in question) by increasing the credit limit myself since its a secured card to offset the High Credit situtation that will be reported.

@sznthescore I really wouldn't be dumping more money into it, you will be fine for one cycle.

Besides, even if you add money, it still won't be reflected till next reporting cycle at which time your utilization will not be an issue.

Re: Overlimit Penalty two part question

Zoostation1 — Thu, 11 Aug 2022 04:29:50 GMT

I have not gone over limit on my cards, but I've also been under the impression that the high balance means nothing if it's not the statement balance reported. If that's not the case and a high non statement reported balance can be used against you then that's shameful and a serious flaw in scoring models IMO. That would penalize people just for making a large purchase via CC. I have had a high balance of $1517 on a card with a $2000 llimit, but I never let that balance report at statement closing on that card.

Re: Overlimit Penalty two part question

Brian_Earl_Spilner — Thu, 11 Aug 2022 04:46:36 GMT

@Zoostation1 wrote:
I have not gone over limit on my cards, but I've also been under the impression that the high balance means nothing if it's not the statement balance reported. If that's not the case and a high non statement reported balance can be used against you then that's shameful and a serious flaw in scoring models IMO. That would penalize people just for making a large purchase via CC. I have had a high balance of $1517 on a card with a $2000 llimit, but I never let that balance report at statement closing on that card.

It's not shameful or a fico flaw. Existing lenders have access to your reports due to permissable purpose. Lenders will sp your reports and analyze that data. If their algorithms believe you may be a higher risk because you went over your limit, they'll use that data to make those decisions. No different than trending data being added into the new fico 10T.

Re: Overlimit Penalty two part question

FireMedic1 — Thu, 11 Aug 2022 10:18:28 GMT

@sznthescoreSince its a secured card. Your trying to prove yourself to NFCU that your ready to graduate and can handle your account with responsible use. Going OTL may hamper your graduation period. Its your training wheels for now with them. As @Remedios said. You dont need more $ in the account. Put the card on hold. Pay down the balance as it is now. Then treat it like a charge card. You charge it. PIF come statement date. This will show NFCU that your ready for the cap and gown.

Re: Overlimit Penalty two part question

Zoostation1 — Thu, 11 Aug 2022 16:36:23 GMT

@Brian_Earl_Spilner wrote:

It's not shameful or a fico flaw. Existing lenders have access to your reports due to permissable purpose. Lenders will sp your reports and analyze that data. If their algorithms believe you may be a higher risk because you went over your limit, they'll use that data to make those decisions. No different than trending data being added into the new fico 10T.

I should clarify that I would expect over limit to report and don't have any real qualms with that. I would have a major problem with a high but still under your limit balance being reported if it's paid down before the closing date. My original choice of verbiage was poor.

Re: Overlimit Penalty two part question

CreditMarathoner — Sat, 27 Aug 2022 22:39:20 GMT

Going overlimit might put you in that lender's penalty box for a while (getting denied for CLIs or new approvals from them for a while), but unless the high utilization reports, it won't affect your scores. It also won't be recorded as derogatory.

The highest balance the card had will be shown in your report, but this doesn't affect FICO scores. Having it be higher than the limit shouldn't cause any issues either. I've had cards where I voluntarily lowered the limit to an amount lower than the "highest balance ever" and nothing bad happened, even when applying for a mortgage no one ever asked about it.

Re: Overlimit Penalty two part question

sznthescore — Sun, 28 Aug 2022 00:19:32 GMT

Thank you for the info @CreditMarathoner !!