topic Re: Any harm in requesting a CLD? in General Credit Topics

Any harm in requesting a CLD?

Gunnar419 — Mon, 21 Apr 2014 20:05:06 GMT

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.

Re: Any harm in requesting a CLD?

Revelate — Mon, 21 Apr 2014 20:21:07 GMT

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.

Re: Any harm in requesting a CLD?

Gunnar419 — Mon, 21 Apr 2014 20:47:54 GMT

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.

Re: Any harm in requesting a CLD?

NikoD — Mon, 21 Apr 2014 21:35:44 GMT

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?

Re: Any harm in requesting a CLD?

Anonymous — Mon, 21 Apr 2014 22:46:33 GMT

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.

Re: Any harm in requesting a CLD?

Gunnar419 — Mon, 21 Apr 2014 23:16:34 GMT

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.

Re: Any harm in requesting a CLD?

ways2go — Tue, 22 Apr 2014 01:39:43 GMT

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.

Re: Any harm in requesting a CLD?

eagle2013 — Tue, 22 Apr 2014 06:51:48 GMT

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.

Re: Any harm in requesting a CLD?

takeshi74 — Tue, 22 Apr 2014 12:29:38 GMT

@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.

Re: Any harm in requesting a CLD?

Gunnar419 — Tue, 22 Apr 2014 13:06:45 GMT

@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.

Re: Any harm in requesting a CLD?

thom02099 — Tue, 22 Apr 2014 14:19:53 GMT

Others have made some very good points, and it appears you're heeding the suggestions. Just one other quick comment.

Why bring unnecessary attention to yourself, by requesting a CLD without cause? Particularly with AMEX, who anecdotally monitor every waking, breathing moment of our existance (tongue firmly in cheek there )! But seriously, it COULD raise a red flag with AMEX, to more closely monitor your activities and could jeopardise future applications with them. Remember, this credit journey is for the long haul. While you may think that having a CL that's 2X your annual salary (mine is also in that vicinity) is detrimental or uncomfortable, your income will likely grow over the years. Depending on your current age, and I'm presuming you're not nearly as old as I am (older than dirt!), you've got a lot of credit years ahead of you. Keep your current CL and just watch everything dilligently.

Re: Any harm in requesting a CLD?

ways2go — Wed, 23 Apr 2014 00:49:08 GMT

Seriously , you can havea CL 2x your base salary?

Re: Any harm in requesting a CLD?

Gunnar419 — Wed, 23 Apr 2014 01:11:09 GMT

@ways2go wrote:
Seriously , you can havea CL 2x your base salary?

Seriously, you can and I do. But then I may be almost as old as thom02099 up there and have had credit for a long, long time. My income is middling, but I've never missed a payment in my life, I always pay more than minimums, I keep utilization low, don't have a lot of cards, I don't run a lot of balances, I never max a card, and in short I do all kinds of things banks like and I've done those things forever. I've also used techniques I've learned from the very smart people at MyFico.

I assume quite a few people here have total CLs well beyond their annual incomes. It's just something that takes time and rigorous credit management.

Re: Any harm in requesting a CLD?

Gunnar419 — Wed, 23 Apr 2014 01:14:50 GMT

@thom02099 wrote:
Others have made some very good points, and it appears you're heeding the suggestions. Just one other quick comment.

Why bring unnecessary attention to yourself, by requesting a CLD without cause? Particularly with AMEX, who anecdotally monitor every waking, breathing moment of our existance (tongue firmly in cheek there )! But seriously, it COULD raise a red flag with AMEX, to more closely monitor your activities and could jeopardise future applications with them. Remember, this credit journey is for the long haul. While you may think that having a CL that's 2X your annual salary (mine is also in that vicinity) is detrimental or uncomfortable, your income will likely grow over the years. Depending on your current age, and I'm presuming you're not nearly as old as I am (older than dirt!), you've got a lot of credit years ahead of you. Keep your current CL and just watch everything dilligently.

More points well taken, thom. Thank you. I'm absolutely heeding the advice of you smart people and have given up on the idea of asking for a CLD.

I'm still thinking about closing the BCE, but before that I'll see if Amex will reallocate part of its credit line to my other Amex card (TE). If they will, then I'll close the BCE but still be able to keep part of its CL.

Does anybody know if Amex still allows reallocations?

Re: Any harm in requesting a CLD?

thom02099 — Wed, 23 Apr 2014 11:55:45 GMT

@Gunnar419 wrote:
@thom02099 wrote:
Others have made some very good points, and it appears you're heeding the suggestions. Just one other quick comment.

Why bring unnecessary attention to yourself, by requesting a CLD without cause? Particularly with AMEX, who anecdotally monitor every waking, breathing moment of our existance (tongue firmly in cheek there )! But seriously, it COULD raise a red flag with AMEX, to more closely monitor your activities and could jeopardise future applications with them. Remember, this credit journey is for the long haul. While you may think that having a CL that's 2X your annual salary (mine is also in that vicinity) is detrimental or uncomfortable, your income will likely grow over the years. Depending on your current age, and I'm presuming you're not nearly as old as I am (older than dirt!), you've got a lot of credit years ahead of you. Keep your current CL and just watch everything dilligently.
More points well taken, thom. Thank you. I'm absolutely heeding the advice of you smart people and have given up on the idea of asking for a CLD.

I'm still thinking about closing the BCE, but before that I'll see if Amex will reallocate part of its credit line to my other Amex card (TE). If they will, then I'll close the BCE but still be able to keep part of its CL.

Does anybody know if Amex still allows reallocations?

Yes. I recently did that, with my worthless Clear card, to my newer BCP card. Moved most of the CL to the BCP with no problem, left a $1K limit on the Clear.

Re: Any harm in requesting a CLD?

Anonymous — Wed, 23 Apr 2014 12:09:23 GMT

Glad you asked the question. Same concerns have crossed my mind. Yes, I do have credit available greater than my income.

Re: Any harm in requesting a CLD?

Anonymous — Wed, 23 Apr 2014 13:26:17 GMT

@Anonymous wrote:
Glad you asked the question. Same concerns have crossed my mind. Yes, I do have credit available greater than my income.

I think it's possible to find individual underwriters who are appalled by this situation, and others who are impressed.

Since FICO scoring doesn't care, I'd leave this situation alone unless you are targetting specific lenders and have direct knowledge of what they're looking for.

Re: Any harm in requesting a CLD?

takeshi74 — Wed, 23 Apr 2014 17:09:35 GMT

@ways2go wrote:
Seriously , you can havea CL 2x your base salary?

I'm not at 2x but I am at ~1.7x. 2x wouldn't take much more.

Re: Any harm in requesting a CLD?

Revelate — Wed, 23 Apr 2014 17:34:17 GMT

@takeshi74 wrote:
@ways2go wrote:
Seriously , you can havea CL 2x your base salary?
I'm not at 2x but I am at ~1.7x. 2x wouldn't take much more.

Heh, well my own current calculation has a division by zero issue with it; admittedly that's temporary but on the surface it looks infinitely worse than 2x.

Re: Any harm in requesting a CLD?

ways2go — Thu, 24 Apr 2014 19:38:58 GMT

Yeah, reason I asked about the 2X Cl vs. income is that after getting a NFCU with an extremely good limit and then two additional Amex Cards with a total extra 22.5K . I am getting close to being 1x my income. I never plan on getting a mortgage and I don't plan on going wild on my cards. I'm just thinking that one of them are going to CLD me.........