topic Re: Card over limit credit score goes down will it recover? in Understanding FICO® Scoring

Card over limit credit score goes down will it recover?

MountainHiker — Thu, 11 May 2023 21:03:28 GMT

Hi everyone.

There was a question put to me that I could not answer. But I knew where to go for that information. Here!

I have a friend who just went over her spending limit accidentally. She experienced interest fees that put her over her credit card limit. When it reported to her credit bureau she lost around 17 FICO points or there abouts. Can't remember exactly how much she said. In any case she can't pay her card down right away but she did pay enough to get her card back under the spending limit.

Her question is this, will just getting it back under the spending limit recover any of those fico points when the account reports again?

Thanks for answering this question. I had no idea what to tell her.

Re: Card over limit credit score goes down will it recover?

M_Smart007 — Thu, 11 May 2023 21:15:31 GMT

17 FICO's is not really a huge deal ..IMO

Here are Utilization breakpoints -> 88.9%, 68.9%, 48.9%, 28.9% & 8.9%

To regain scores, one would want to get the card under these^^. The lower the Utilization ..the better.

Having a card report over 88.9% is really considered "maxed out" and is usually not good practice.

Others will chime in.....

Re: Card over limit credit score goes down will it recover?

FireMedic1 — Thu, 11 May 2023 21:18:25 GMT

Your friend will get a few points back. You didnt say which card it is. Few will close it. Leaving a balance on the edge of OTL is risking it for many months. Get it down to at least 89% and then more points will come back. Right now its finances over FICO. Get the debt down and quit using the card. Actually take it from them until the swipe fever is gone. You'd do them a favor.

Re: Card over limit credit score goes down will it recover?

ptatohed — Thu, 11 May 2023 23:09:44 GMT

@MountainHiker wrote:
Hi everyone.
There was a question put to me that I could not answer. But I knew where to go for that information. Here!

I have a friend who just went over her spending limit accidentally. She experienced interest fees that put her over her credit card limit. When it reported to her credit bureau she lost around 17 FICO points or there abouts. Can't remember exactly how much she said. In any case she can't pay her card down right away but she did pay enough to get her card back under the spending limit.

Her question is this, will just getting it back under the spending limit recover any of those fico points when the account reports again?

Thanks for answering this question. I had no idea what to tell her.

I doubt going over the spending limit hurt her nor will paying the card down to just below the CL help her. The 17 point loss is probably from something else. You didn't say what her balance on this card was before going over the limit but if it was a low balance to, all of a sudden, a maxed out balance, that could do it.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Thu, 11 May 2023 23:43:52 GMT

@M_Smart007 wrote:
17 FICO's is not really a huge deal ..IMO
Here are Utilization breakpoints -> 88.9%, 68.9%, 48.9%, 28.9% & 8.9%
To regain scores, one would want to get the card under these^^. The lower the Utilization ..the better.
Having a card report over 88.9% is really considered "maxed out" and is usually not good practice.

Others will chime in.....

Thank you M Smart. I will share those data points when next I speak with her. I think those fees caught her by surprise. Essentially she needs to pay her card down to avoid this situation happening again.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Fri, 12 May 2023 00:05:01 GMT

@FireMedic1 wrote:
Your friend will get a few points back. You didnt say which card it is. Few will close it. Leaving a balance on the edge of OTL is risking it for many months. Get it down to at least 89% and then more points will come back. Right now its finances over FICO. Get the debt down and quit using the card. Actually take it from them until the swipe fever is gone. You'd do them a favor.

Hi FireMedic

It's her TD bank visa. Think she was getting ready to buy a car in a few months but her score went down which affects her financing tier options. I think it caught her by surprise that her score took a hit for simply going a couple dollars over her limit because of interest fees.

I personally didn't know what to tell her because I've never heard of that before. Didn't know it was possible to be penalize for going her balance reporting a couple dollars higher than the actual spending limit.

And she's not mistaken because she sent me a picture of it. Essentially the credit report says she lost the points for going over the limit. I think she learned a lesson.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Fri, 12 May 2023 00:12:36 GMT

@ptatohed wrote:
@MountainHiker wrote:
Hi everyone.
There was a question put to me that I could not answer. But I knew where to go for that information. Here!

I have a friend who just went over her spending limit accidentally. She experienced interest fees that put her over her credit card limit. When it reported to her credit bureau she lost around 17 FICO points or there abouts. Can't remember exactly how much she said. In any case she can't pay her card down right away but she did pay enough to get her card back under the spending limit.

Her question is this, will just getting it back under the spending limit recover any of those fico points when the account reports again?

Thanks for answering this question. I had no idea what to tell her.
I doubt going over the spending limit hurt her nor will paying the card down to just below the CL help her. The 17 point loss is probably from something else. You didn't say what her balance on this card was before going over the limit but if it was a low balance to, all of a sudden, a maxed out balance, that could do it.

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.

Re: Card over limit credit score goes down will it recover?

Anonymous — Fri, 12 May 2023 00:37:29 GMT

@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.

So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Fri, 12 May 2023 22:21:13 GMT

@Anonymous wrote:
@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.

She explained the over limit situation as being fee related. And she wasn't hit with a over the limit fee because it wasn't caused by spending.

Re: Card over limit credit score goes down will it recover?

M_Smart007 — Fri, 12 May 2023 22:38:01 GMT

@MountainHiker wrote:
@Anonymous wrote:
@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.
She explained the over limit situation as being fee related. And she wasn't hit with a over the limit fee because it wasn't caused by spending.

That is great news

Re: Card over limit credit score goes down will it recover?

Lou-natic — Sat, 13 May 2023 18:45:38 GMT

@MountainHiker wrote:
@Anonymous wrote:
@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.
She explained the over limit situation as being fee related. And she wasn't hit with a over the limit fee because it wasn't caused by spending.

Well it was caused by spending really and if you are paying interest then you are already behind the power curve! If that interest accrual is then also causing an over the limit situation that is a a sure sign of financial distress. Obviously her FICO score drop is in fact indicating that she is a higher credit risk...because she is!

Re: Card over limit credit score goes down will it recover?

FireMedic1 — Sat, 13 May 2023 19:16:25 GMT

We dont know the whole file. Just one card. If thats the only card and its running over 89% util each month. Thats a score killer. Util %'s can kill or bring back to life a better score. Tell them to pay it down and use it as a debit card. My fav saying. If you cant pay it. Dont charge it. Emergenicies only. No interest paid.

Re: Card over limit credit score goes down will it recover?

Anonymous — Sat, 13 May 2023 20:40:29 GMT

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.

WIth all due respect, she got what she deserved, and if the point drop crossed a threshold, she's well entitled to the increase in interest rate on the car purchase. Of course it may make no difference, but I would think if lenders saw her constantly hitting the CL without a significant paydown they would be leery.

Re: Card over limit credit score goes down will it recover?

Brian_Earl_Spilner — Sat, 13 May 2023 21:45:30 GMT

@Anonymous wrote:
@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.

Well, td once hired a collections company because I forgot to pay. Got the collections notice around 12 or so days after. Tried calling to see if it was a scam and was routed by the system to the collections agency. They didn't close the account, just hired a collections agency. Everything was back to normal after.

Re: Card over limit credit score goes down will it recover?

Brian_Earl_Spilner — Sat, 13 May 2023 21:58:20 GMT

@Anonymous wrote:
She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
WIth all due respect, she got what she deserved, and if the point drop crossed a threshold, she's well entitled to the increase in interest rate on the car purchase. Of course it may make no difference, but I would think if lenders saw her constantly hitting the CL without a significant paydown they would be leery.

With all due respect, you have no optics on that person's life to make a comment like they got what they deserved. How do you know they deserved it? You have some insight on their life and history of financial mismanagement, or just basing that on a single reported instance on a single card? Stop being a jerk.

Re: Card over limit credit score goes down will it recover?

Brian_Earl_Spilner — Sat, 13 May 2023 22:03:15 GMT

Points will come back. The main concern should be what lenders will do with that information. A lender may hand out adverse action, like fees, or penalty apr. But, there are other lenders that monitor reports for things like this. Both Discover and NFCU will take note and deny things such as CLIs due to going over the limit. NFCU actually has a reason code that an account went over the limit in the last 12 months indicating how long it may be affecting their decisions on a different account(s).

Re: Card over limit credit score goes down will it recover?

Jordan23ww — Sat, 13 May 2023 23:37:33 GMT

There's a saying in the credit community, "Utilization has no memory"! That just means if a person loses points because of a change in their credit card utilization going up, assuming there are no other negative changes in their profile, when they pay the card back down to what it used to be, they will regain those points. So in this scenario, as long as there are no other drastic or negative changes in their credit profile they should regain those 17 points once they repay the increase in their balance and the card reports these changes to the credit bureaus.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Sun, 14 May 2023 04:09:55 GMT

@FireMedic1 wrote:
We dont know the whole file. Just one card. If thats the only card and its running over 89% util each month. Thats a score killer. Util %'s can kill or bring back to life a better score. Tell them to pay it down and use it as a debit card. My fav saying. If you cant pay it. Dont charge it. Emergenicies only. No interest paid.

I couldn't agree more. She needs to put that card in a sock drawer if you ask me. It's a little risky running your cards up without a plan of action to pay it down right away.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Sun, 14 May 2023 04:33:06 GMT

@Anonymous wrote:
She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
WIth all due respect, she got what she deserved, and if the point drop crossed a threshold, she's well entitled to the increase in interest rate on the car purchase. Of course it may make no difference, but I would think if lenders saw her constantly hitting the CL without a significant paydown they would be leery.

I will mention that to her. But I don't think she has a history of going over her limit. This was the first time. And knowing her definitely the last.

Re: Card over limit credit score goes down will it recover?

MountainHiker — Sun, 14 May 2023 04:44:19 GMT

@Brian_Earl_Spilner wrote:
@Anonymous wrote:
@MountainHiker wrote:
Hi

She likes to run up her card quite often. Think she was about $10 under her spending limit and when her interest fees hit the account reported two or three dollars over her limit.
So, these were just interest fees, not (the now very rare) Over-the-limit fee? Apart from FICO, the other question is whether TD cares. Probably not, but if they do she will be balance-chased as she pays down the card.
Well, td once hired a collections company because I forgot to pay. Got the collections notice around 12 or so days after. Tried calling to see if it was a scam and was routed by the system to the collections agency. They didn't close the account, just hired a collections agency. Everything was back to normal after.

I've never dealt with TD bank. How are they overall to do business with?

That sounds very aggressive imo. It would seem the better course of action to contact the customer and find out why the payment was missed. Could have been a complete oversight. I don't have any Banks which I'm doing business with that would behave in such a manner. In fact my bank contacted me about two months ago just to see if there was anything they could do for me and to make sure I was happy with the service. And I'm not going to lie. It caught me by surprise pleasantly, because banks unlike Credit Unions aren't always known for that considerate neighborhood approach.

But sicking the dogs on a long term customer without checking on that customer sounds very odd. And especially if it was a one time incident. But maybe I'm missing something. Are you still with them?

BTW let me just say you're a awesome contributor on these boards and I suspect life in general.