topic Re: Lowering my credit line in Rebuilding Your Credit

Lowering my credit line

BrownieNpadre — Sun, 20 Dec 2020 14:25:35 GMT

I am self employed and went through a slow period and ran the balances up on CC really high. I have no negative payment history, however my balance % is high and has lowered me from 700 to mid to low 600s.

The problems is when I attempt to pay down my balances the CC companys are lower my credit line so it is not helping my score because my balance % is staying the same or getting worst.

Any suggestion on how to keep the CC company's from lower my credit line as I pay them off?

Re: Lowering my credit line

Anonymous — Sun, 20 Dec 2020 14:28:37 GMT

It's called balance chasing. Your lenders are not comfortable with the risk you present currently. Unfortunately, there isn't much you can do at this point. Carrying high balances has spooked them. Don't be surprised if some of them close the cards eventually as well.

Who are the lender(s)?

Re: Lowering my credit line

OmarGB9 — Sun, 20 Dec 2020 15:32:59 GMT

Unfortunately there's nothing you can do to stop it. As mentioned above, that is known as balance chasing, and the only thing you can really do is hurry and try to pay it off completely. They'll stop lowering your limit once they get it down to something they're comfortable with. They could also close down the account altogether, unfortunately. Let's hope not, but it is a possibility.

Re: Lowering my credit line

jnbowmar — Sun, 20 Dec 2020 18:10:19 GMT

Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

The monkeys that they pay as "analysts" can't fathom seasonal revenue or even have all the information required to deem your credit behavior a true risk, so I would only pay the minimum, because if you try to pay it off and then use the credit line it won't be there. So wait untill buissness picks back up and you have substainial cash on hand before you even consider paying them off in full.

And don't close them yourself either, they have to pay someone to report every month, so your getting your monies worth even if you can't access the credit.

Re: Lowering my credit line

gdale6 — Sun, 20 Dec 2020 18:31:20 GMT

@jnbowmar wrote:

And don't close them yourself either, they have to pay someone to report every month, so your getting your monies worth even if you can't access the credit.

They are automatically reported and whether or not the account is open or closed has no bearing on monthly reporting as long as there is a balance being carried as the FCRA requires all creditors to report accurate information if they report anything at all. Monthly payments lowering the balance therefore would require an update on a closed account with a balance.

Re: Lowering my credit line

OmarGB9 — Sun, 20 Dec 2020 18:33:07 GMT

@jnbowmar wrote:
Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

The monkeys that they pay as "analysts" can't fathom seasonal revenue or even have all the information required to deem your credit behavior a true risk, so I would only pay the minimum, because if you try to pay it off and then use the credit line it won't be there. So wait untill buissness picks back up and you have substainial cash on hand before you even consider paying them off in full.

And don't close them yourself either, they have to pay someone to report every month, so your getting your monies worth even if you can't access the credit.

I don't agree at all with only paying the minimum and taking years to pay it off. Prolonged high utilization can lead to a domino effect of other creditors following suit and begin balance chasing, leading to more maxed out accounts and possible account closures. Paying off the credit line to be able to use it again should be the last thing on OP's mind.

Not only that, but you're basically telling OP to pay as much interest as possible just because.

Re: Lowering my credit line

Anonymous — Sun, 20 Dec 2020 18:36:51 GMT

@jnbowmar wrote:
Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

The monkeys that they pay as "analysts" can't fathom seasonal revenue or even have all the information required to deem your credit behavior a true risk, so I would only pay the minimum, because if you try to pay it off and then use the credit line it won't be there. So wait untill buissness picks back up and you have substainial cash on hand before you even consider paying them off in full.

And don't close them yourself either, they have to pay someone to report every month, so your getting your monies worth even if you can't access the credit.
@jnbowmar wrote:
Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

The monkeys that they pay as "analysts" can't fathom seasonal revenue or even have all the information required to deem your credit behavior a true risk, so I would only pay the minimum, because if you try to pay it off and then use the credit line it won't be there. So wait untill buissness picks back up and you have substainial cash on hand before you even consider paying them off in full.

Whew! Bad Advice. To most, it makes little (especially financial) sense to pay a bunch of unnecessary interest just to "stick it to them". In reality, this is only hurting the consumer.

I'm sure lenders understand seasonal business just fine. I'm also sure they understand that many, many small businesses are on the brink of bankruptcy due to the pandemic and the resulting restrictions imposed on businesses.

The lenders are making risk based business decisions. Keep the emotion out of it.

Re: Lowering my credit line

Remedios — Sun, 20 Dec 2020 18:46:30 GMT

@jnbowmar wrote:
Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

The monkeys that they pay as "analysts" can't fathom seasonal revenue or even have all the information required to deem your credit behavior a true risk, so I would only pay the minimum, because if you try to pay it off and then use the credit line it won't be there. So wait untill buissness picks back up and you have substainial cash on hand before you even consider paying them off in full.

And don't close them yourself either, they have to pay someone to report every month, so your getting your monies worth even if you can't access the credit.

A couple of things.

There are many CUs that will CLD or balance chase. They might wait a bit longer, but ultimately it will happen.

Please do not call anyone monkeys. Most people working in UW department are incredibly competent at what they do, hence being entrusted with gate keeper role.

Save name calling for different place.

Advising someone who might be already struggling to pay maximum interest (based on minimum payment) is poor advice, and a costly one, too. That's without mentioning accounts might end up closed for that very reason.

Re: Lowering my credit line

BrownieNpadre — Sun, 20 Dec 2020 19:28:08 GMT

So far is has just been Chase and Citi that has hit me. I guess I will see what happens if I start paying off capital one and Wells Fargo card first. That way I may be able to get my score up high enough to keep the other two from balance chasing me when I pay them down.

Re: Lowering my credit line

OmarGB9 — Sun, 20 Dec 2020 19:35:22 GMT

@BrownieNpadre wrote:
So far is has just been Chase and Citi that has hit me. I guess I will see what happens if I start paying off capital one and Wells Fargo card first. That way I may be able to get my score up high enough to keep the other two from balance chasing me when I pay them down.

I wouldn't worry so much about score as much as balances. Pay down your high balances as quickly and comfortably as you can, without overextending yourself, and as balances go down, utilization ratio will follow suit, and the score increases will follow.

Re: Lowering my credit line

Gunnerboy — Sun, 20 Dec 2020 19:59:41 GMT

@jnbowmar wrote:
Its called balance chasing, so only pay the miniumum and take years to pay it off, Credit Unions don't really do this so in the future have most of your credit cards from credit unions.

About a decade ago, BECU decreased my CL two times over a four month period. After about six statements of on-time, larger than minimum payments, they reinstated my original limit.

Edit to add:

My BECU util was about 80% at that time, and I was making just minimum payments for probably four consecutive statements.

Re: Lowering my credit line

Anonymous — Thu, 24 Dec 2020 02:40:53 GMT

Are you able to make more than minimum payments on the cards with high interest rates. This will help you with your utilization and also saves you money on the interest your paying on your balances. Work on decreasing your credit balances, dont chase your score or worry about the lowering of credit limit, since once your utilization decreases the same credit Co. will increase your balance again. As always your credit cards and scores are always a snapshot at that particular time.

Re: Lowering my credit line

OmarGB9 — Thu, 24 Dec 2020 06:05:47 GMT

@Anonymous wrote:
Are you able to make more than minimum payments on the cards with high interest rates. This will help you with your utilization and also saves you money on the interest your paying on your balances. Work on decreasing your credit balances, dont chase your score or worry about the lowering of credit limit, since once your utilization decreases the same credit Co. will increase your balance again. As always your credit cards and scores are always a snapshot at that particular time.

I think you mean increase your limit again, right?

Re: Lowering my credit line

Anonymous — Tue, 04 May 2021 23:37:14 GMT

Jnbowmar is correct when telling you that just making the minimum payment is an option. I understand some people think it's absurd to pay so much interest for months to years, only to keep an initial credit line, or opportunity to keep an account open. However, my spouse did this and after a year or two it paid off. Once his scores rebounded, we paid the cards in question off and the balance chasing stopped. It saved his average age of accounts, and fast forward to now his scores are in the 800s. No longer worried about Synchrony Bank or any other! Just an option! If you have the extra money for interest, the patience, and you're not making any moves with your credit for a while. I recommend it!