topic Re: Opinions on "High Balance." in General Credit Topics

Opinions on "High Balance."

Anonymous — Thu, 30 Nov 2017 01:34:25 GMT

I'm curious what all of you think regarding "High Balance" as shown on your revolving accounts. I'm not talking with the lender with which the high balance itself is reported, as naturally that lender can see your entire account history, spend/payment patterns, etc. I'm more referring to how other lenders may view or perceive your reported high balances. I'm posing this question from the perspective of someone that follows the behavior of a Transactor and tends to PIF; I'm not talking about someone that carries balances that may or may not result in a greater "high balance" reported on any account.

For example, two otherwise equal individuals may have a CC with a $20k limit. One of them has a "high balance" of $500 reported on their credit report, where the other has a "high balance" of $10,000 reported. Assuming both of these individuals today have low current balances, say single-digit utilization, how do you all think outside creditors view the respective "high balance" reported for these two individuals?

One argument could be that the $10k reported high balance is a sign of strength with respect to creditworthiness. That is, they had their reported balance that high at one point, but now it's back down to single-digit utilization. Perhaps their spend is significant and their payments are significant as well. This could be viewed as a "good" thing.

The converse argument would be that a balance reported that high could be a sign of increased risk. I'm posing these "arguments" with the assumption of a clean profile... that is, these individuals have never been late on a payment.

Anyway, does anyone think that having high [relative to limits] "high balances" reported is either a positive or a negative thing?

Re: Opinions on "High Balance."

Schwartzinator — Thu, 30 Nov 2017 03:23:46 GMT

It depends on whether or not trended credit data is provided with the report other lenders receive. As you mention, if it’s following patterns of heavy spend and large repayments there’s no logical reason to view it as a negative, but I can see where it may raise questions on why they’re relying so heavily on credit.

Re: Opinions on "High Balance."

Anonymous — Thu, 30 Nov 2017 03:48:34 GMT

I would think that having high reported balance but now a lower owed balance would be viewed as positive by creditors, since it shows they are able to pay their balance down.

Re: Opinions on "High Balance."

Anonymous — Thu, 30 Nov 2017 03:56:54 GMT

@Anonymous wrote:
I would think that having high reported balance but now a lower owed balance would be viewed as positive by creditors, since it shows they are able to pay their balance down.

That's sort of where my head was at on the subject, but would a creditor ever question why such a high balance was reported in the first place? I really don't know.

Re: Opinions on "High Balance."

Thomas_Thumb — Thu, 30 Nov 2017 13:24:39 GMT

If one has perfect payment history, I'd view high balances as positive indicators showing ability to handle debt load.

Re: Opinions on "High Balance."

Gmood1 — Thu, 30 Nov 2017 13:36:00 GMT

My thinking is the only thing the other creditors will question is '"How can we get BBS to use our cards the next time he spends like that?".

Re: Opinions on "High Balance."

Anonymous — Thu, 30 Nov 2017 13:56:23 GMT

@Gmood1 wrote:
My thinking is the only thing the other creditors will question is '"How can we get BBS to use our cards the next time he spends like that?".

Which I guess, in theory, could cause other creditors to initiate a CLI, for example.

So, it seems the overwhelming opinion above is that higher "high balances" reported is a good thing, but only if you have perfect payment history.

Re: Opinions on "High Balance."

Gmood1 — Thu, 30 Nov 2017 14:32:19 GMT

Yuppers!
I can tell you IME so far. The most aggressive creditors I've experienced in trying to grow their customer base are:
1. Amex, these guys want to grow their market share and they're not shy about it.
2. Synchrony bank
3. Bank of America
4. Navy Federal Credit Union
5. Capitol One, they were closer to the top until guidelines changed recently.
6. USAA
Out of all the National banks. Chase comes in dead last. They already control the majority. And don't seem concerned with fighting over the scraps. Lol

Re: Opinions on "High Balance."

Anonymous — Thu, 30 Nov 2017 16:16:27 GMT

I agree with that list, at least with the creditors I have experience with on it. The only asterisk I would mention is with respect to Capital One and that's if you start out with them with a starter account and a low score that the chances of that account growing significantly are very small.

I would also add Discover to the list. While there are some people out there that say their Discover card doesn't grow, there are a ton that have taken around a $4000-$6000 SL to $30k-$50k inside 2 years, all from SPs.

Re: Opinions on "High Balance."

iced — Thu, 30 Nov 2017 17:10:10 GMT

@Anonymous wrote:
I'm curious what all of you think regarding "High Balance" as shown on your revolving accounts. I'm not talking with the lender with which the high balance itself is reported, as naturally that lender can see your entire account history, spend/payment patterns, etc. I'm more referring to how other lenders may view or perceive your reported high balances. I'm posing this question from the perspective of someone that follows the behavior of a Transactor and tends to PIF; I'm not talking about someone that carries balances that may or may not result in a greater "high balance" reported on any account.

For example, two otherwise equal individuals may have a CC with a $20k limit. One of them has a "high balance" of $500 reported on their credit report, where the other has a "high balance" of $10,000 reported. Assuming both of these individuals today have low current balances, say single-digit utilization, how do you all think outside creditors view the respective "high balance" reported for these two individuals?

One argument could be that the $10k reported high balance is a sign of strength with respect to creditworthiness. That is, they had their reported balance that high at one point, but now it's back down to single-digit utilization. Perhaps their spend is significant and their payments are significant as well. This could be viewed as a "good" thing.

The converse argument would be that a balance reported that high could be a sign of increased risk. I'm posing these "arguments" with the assumption of a clean profile... that is, these individuals have never been late on a payment.

Anyway, does anyone think that having high [relative to limits] "high balances" reported is either a positive or a negative thing?

I think people on this forum analyze and over-analyze their credit reports to an extent that reaches far beyond anything that most lenders would even consider doing (except possibly mortgage lenders).

That is to say, I barely notice the high balance on my accounts and I'm pretty sure banks don't really pay attention to it, either. Instead, I'm of the opinion that lenders are more apt to start lower with a new client and build an internal score (a la Chase) rather than jump in with both feet based on a black-box-from-the-outside view of someone's creditworthiness. They'll note the key metrics (score, income, late payment history, overall utilization) but I doubt they're playing the guessing game as to whether someone is a risk or a whale. If the key metrics warrant a credit line, grant it and if it turns out to be a whale, it's easy to raise the limit later.

Re: Opinions on "High Balance."

Revelate — Fri, 01 Dec 2017 20:21:56 GMT

I want to show all lenders I'm a profitable customer.

High balance is nothing but goodness assuming your current balance doesn't stay at your high balance for extended periods of time.

Re: Opinions on "High Balance."

trusty — Fri, 01 Dec 2017 21:21:23 GMT

In my experience, upon manual review, it really can go either way. To wit: if you have zero balance but have maxed out your card or cards in the past, an underwriter may worry that - if times get tough - your account has the potential to become a total loss.

However, if you have massive amounts of available credit, and yet, have never spent hardly anything on any of your cards... some prospective creditors will claim that you already have sufficient credit.

Conversely, if a creditor is looking to expand their exposure... then showing that you've been able to manage large balances with aplomb may look enticing to such a creditor.

I've literally seen both, and the double-speak can get pretty annoying. With some underwriters, it can seem like you just cannot win. Alas, not all banks have the same underwriting standards; and those standards tend to change with their corporate economics.

So, that's why forums such as these are an enormous wealth of information. If we know even one iota of what is expected of us, we are able to adapt and work within these constructs to the best of our abilities.

Re: Opinions on "High Balance."

Revelate — Sat, 02 Dec 2017 01:55:56 GMT

Hrm, I'd suggest that a previous large high balance without any deliquencies is always a positive.

The worries come in when they see a pattern of lates regarding said high balance.

Re: Opinions on "High Balance."

Glen_M — Sat, 02 Dec 2017 01:58:45 GMT

Someone at Fair Isaacs thought it was marketable information. There are potential positive and negative angles, and the examples above are some I have considered.

The high balance numerical value by itself seems neutral, but its effect would seem to be dependant on other information in the report. It can magnify or dampen other influences, favorable or otherwise. The same overall set of information may even raise or lower the percieved score based on what kind of service is being sought.

Re: Opinions on "High Balance."

Anonymous — Sat, 02 Dec 2017 04:23:34 GMT

@Revelate wrote:
I want to show all lenders I'm a profitable customer.

High balance is nothing but goodness assuming your current balance doesn't stay at your high balance for extended periods of time.

In your opinion, how does showing a greater high balance show that you're a profitable customer? Does it simply show that you spend a lot and a greater spend equates to greater profits? Assuming no late payments, as well as not carring balances for a long time, it would be profits at a minimal amount of risk from lender perspective.

Re: Opinions on "High Balance."

manyquestions — Sat, 02 Dec 2017 17:14:32 GMT

@Anonymous wrote:
@Revelate wrote:
I want to show all lenders I'm a profitable customer.

High balance is nothing but goodness assuming your current balance doesn't stay at your high balance for extended periods of time.
In your opinion, how does showing a greater high balance show that you're a profitable customer? Does it simply show that you spend a lot and a greater spend equates to greater profits? Assuming no late payments, as well as not carring balances for a long time, it would be profits at a minimal amount of risk from lender perspective.

Yeah. It shows that you use the card. They make transaction fees. It also demonstates crediworthiness if you have paid off high balances in the past.

Re: Opinions on "High Balance."

Shooting-For-800 — Mon, 04 Dec 2017 21:01:44 GMT

I like have high "high balances" report.

Why should I give you a $20k card if you only need $500?

When a $500 per month user needs $15k, they may be headed for disaster.

Its the same as not having any cards and applying for a bunch.

Similar example...

I got denied for a $35k car loan once because I never had that high. I put $20k down on a $45k car previously.

So, I could not buy a cheaper car (from that lender) because my loan was too small on my previous car even though it was actually more expensive.

YMMV

Re: Opinions on "High Balance."

Anonymous — Tue, 05 Dec 2017 05:11:32 GMT

@Shooting-For-800 wrote:
I like have high "high balances" report.

Why should I give you a $20k card if you only need $500?

I think it's important to point out who the $20k card is coming from. You can have two people with $20k limit cards, both that spend $8k/mo on that $20k card, but one reports $500 on it each month where the other reports $5000-$6000. Both of these individuals "need" at least $8k/mo. If it's the creditor with which the individual has the $20k card, certainly they can see the $8k/mo spend, even if $500 is their "high balance." Where it matters is if a different lender is looking at their credit report. Perhaps this individual applies for another card that they're hoping for a $20k SL on. If this other lender sees a high balance of only $500, they may not see as much value in extending this person a $20k SL (even though they have another $20k card already) compared to if their high balance was say $6000.

Re: Opinions on "High Balance."

Anonymous — Tue, 05 Dec 2017 18:22:31 GMT

My apologies if this has been addressed somewhere in the thread, but do we have a definite answer on how HB is determined? Example:

Bob has always had a low balance (< $300) even in the middle of a cycle. He has a credit limit of 20k. His statement prints on the 7th of the month. Last month, he racked up some huge spending and brought his balance to 14k. All charges posted. Then on Dec 1 he paid his balance back down to $350.

If he pulls his reports at Christmas, what will his HB be? 14k or $350?

I had always assumed it would be the small number, but I think TT explained to me once that it would actually be 14k. That's because the issuer separately reports the HB (apart from the monthly balance). If you go up to an ultra-high number mid-cycle, then that number gets reported as the HB.

Am I remembering that right? Have we confirmed that this is the way all issuers work?

Re: Opinions on "High Balance."

Anonymous — Tue, 05 Dec 2017 18:31:52 GMT

Another question:

Does anyone know a clever trick to artificially inflate one's HB, without really buying a bunch of stuff one doesn't need?

A couple years ago that was easy to do. Citibank would let you open a savings or checking account and "fund" the account using a credit card. (To fund a deposit account refers the first intial deposit you make into the account.) This by itself is not unusual and many banks permit this even today. What was unusual was that Citi placed almost no limit on how big that initial deposit could be. The limit was 100k -- vastly higher than the credit limit of almost any specific card.

One of my credit cards has a 17k high balance -- and that's because I used it to fund a Citi checking account a couple years ago. Sadly Citi stopped that practice in March of 2016.

Can anyone think of anything else clever like that?