Re: Afraid of Getting Balance Chased

GApeachy · ‎10-10-2019

@Anonymous wrote:
What's the point of a high credit limit if you can't really use it?

Testing to see how much rope you will hang yourself with....I guess.

My Take Home Pay Don't Take Me Home

Anonymous · ‎10-10-2019

@Anonymous wrote:
What's the point of a high credit limit if you can't really use it?

There's an expectation that you will leave a good bit of your limit purely as padding I think. Since it's built into FICO, it's built into a lot of credit card UW too.

It's not a problem to use your whole limit, it's a problem to use your whole limit and leave it maxed. Most lenders don't get sketched out if you make at least 2x your minimum payment every month and you're actually bringing the balance down but if you max a card and then make minimum payments, it's a sign of stress.

It varies based on your profile and your other cards though. I know lots of people who get a new card and then max it out with a BT and pay the minimum that never have AA because their other cards are all paid in full or small balances.

Remedios · ‎10-10-2019

You can use as much of your limit as you want.
If you want to mitigate the risk from AA due to high utilization being present continously, pay it down before statement prints or allow it to report lower amounts during some months, so it clearly shows peaks and lows.
If you're using majority of your limit, but can only pay a small fraction back, you have a bigger problem than scoring impact.
Bottom line, utilization is easily manipulated via check book.

ChargedUp · ‎10-10-2019

Discover and Cap One are usually pretty solid as long as you don't have any dings on your reports. Paying them off will improve your scores regardless of any possible balance chasing as you're lowering your debt to income. Just let a small balance report on one card and your scores should be optimized.

Anonymous · ‎10-10-2019

Not sure if my experience would help as some of it is dated. In 2007 and 08, my total CL might have been around 110-120K. Back then you could get cash advances on direct deposit with no fee and 0% for 6 mos, 9 mos, 12 mos. I maxed out a couple cards (within $100) and paid the minimum on each on the due date. Had about 90K wrapped in 0% offers. At the time, I could get 5% in a money market so I earned a nice chunk for doing nothing. Never had a CLD or any hint of any creditor getting nervous. But my credit was excellent back then. And it was different times. I was debt free otherwise. May have been a factor.

Recently, I maxed out a new Chase freedom to within $100 of my CL of 19.1K at the time and paid the minimum payment. Paid it in full when 0 expired. 2 months later, my CL went to 23,600.

Did the same this year with Propel which I opened in August 2018. Ran the balance to within about 40 cents of the limit. After I made the minimum payment, I'd charge on it again to get it close to the limit. Within a few months, I got a 2K CLI. Ran it up to about 300 below the line on the new limit. Paid it in full on August 31, 2019. Never had a problem with them or any other card changing anything. Hoping to get a CLI soon on Propel.

I paid down in full a few times in the past and have gotten CLIs. But it might be due to having a 800 score. They might trust higher balances on more than one card for those with higher scores.

Anonymous · ‎10-11-2019

To my knowledge, only Amex is known to chase down credit. You should be good to go with all others. Even if they did, just call and ask to have the credit line restored and you should get it all back.

Anonymous · ‎10-11-2019

So I guess the next logical question is what triggers balance chasing? Is it the high utilization? Late payments? Both? I've paid all of my cards on time. In my mind it would be more of the late payment than the balance itself because they want to charge you interest.

Brian_Earl_Spilner · ‎10-11-2019

@Anonymous wrote:
So I guess the next logical question is what triggers balance chasing? Is it the high utilization? Late payments? Both? I've paid all of my cards on time. In my mind it would be more of the late payment than the balance itself because they want to charge you interest.

It depends on the lender. You could have balance chasing based solely on the fact that you've carried balances on all your cards for so long that a lender no longer wants to play chicken. Typically, a missed payment will trigger it because risk models say it it will snowball across multiple accounts once it starts.

HeavenOhio · ‎10-11-2019

@Anonymous wrote:
To my knowledge, only Amex is known to chase down credit. You should be good to go with all others. Even if they did, just call and ask to have the credit line restored and you should get it all back.

We've seen balance chasing from Chase, Bank of America, Comenity, Barclays, Synchrony, and Citi. In other words, the majority of banks will do it.

AMEX often does a single CLD rather than chasing per se. And often, the initial limit can be restored if the cardholder pays X amount by a certain date.

Capital One and Discover are known for being tolerant of prolonged high utilization. But we've seen a handful of Discover CLDs lately, so I guess we have to stay tuned.

A prolonged high balance with no signs of it being paid down anytime soon is a common reason for adverse action. If there's a derogatory on the report, the chance of AA increases a lot. I would think that a brand new late payment would stand a high chance of kicking in AA.

SouthJamaica · ‎10-11-2019

@Anonymous wrote:
A few of my non-store credit cards are maxed out. I am going to be paying a large chunk of them down, in an effort to raise my score and get ready to refinance my mortgage. I am afraid that they are going to balance chase me. So far, care credit lowered my limit about $6k, but I wasn't using it anyways. I will be paying down Discover and Capital One. Is there a payment strategy to help me not have my limits lowered ? Make several smaller payments? Make one big payment? Big payment on one, let it report and then pay the others down? Am I just screwed no matter what I do?

No there's no bulletproof strategy, just pay them down as fast as you can.

I don't think you're screwed. Balance chasing is pretty rare, so I wouldn't be so worried about it.

And if it happens on 1 or 2 accounts, call them, ask them to reconsider, and if they don't, so be it.