Credit Limit Decrease - You Too?

[kimg727]

I've had a credit card with Eastern Financial Credit Union (based out of Miami, FL) since 2005.  My credit line was $25,500.  I've never had a late payment, the account has never been over the limit and 90% of the time I pay the balance off every month (last month I paid a $10K balance in full). 

Since that account is tied into my online banking (I have my checking and savings with them as well), I noticed a couple weeks back my credit line was reduced from $25,500 to $16,500.  Perplexed and pissed at the same time, I called them.  The representative told me "It's part of the bank bailout."  He said that every account is being individually reviewed.  After which time, the credit lines are being either decreased or the cards are being cancelled. My first inclination was to take it personally; the representative assured me it was nothing I did.  The bank is simply reducing its debt on a global scale.

One week later, I received a letter from the bank stating the credit line was decreased.  The letter stated my CL was decreased due to information contained on my credit report (too many accounts with balances, among other bogus things).  I run my credit every month; I am completely aware of my FICO and credit history...none of which is derogatory.

Now, having worked in the financial industry (risk mitigation) for years, I know CC companies can change their terms at any time but I would have expected an explanation and notice BEFORE the decrease.

I conducted a search on the internet and it appears this is common nowadays, especially with American Express.  Anyone experience this with no valid reasoning whatsoever?

My FICO is 820 and utilization is < 10%.

[haulingthescoreup]

It's everywhere. The banks have to cut the extended credit of all their customers, and they're typically dropping it to just above the typical highest balance. If you can pay in full BEFORE your statement posts, it won't affect your scores. if you carry a balance, or if you wait until your statement posts with the balance due, your scores will be hit to varying degrees.

Moving to Credit Cards.

[cobaltnv]

Sorry to hear about you CLD. As you have correctly noted this appears to be happening to many people (even those with outstanding credit). Many on here have posted the same reasons you received in your letter. I completely agree that the banks should tell you before they CLD you and they should give you a valid reason. Like say the truth, for example. If the banks simply stated what the CSR told you, that the bank was trying to lower their exposure,then most reasonable people would understand that. But atlas, that banks just cannot get themselves to tell the truth and they must come up with some reason why it  is your fault they CLD you.

A quick search on these boards will yield a large number of similar stories to yours. Fortunately I have yet to be CLD, but I don't doubt that it is on the way. I guess the days of a person with a $75k job and $150k credit limit are gone (which is probably a good thing I suppose).

Cheers 

[marty56]

I have noot seen any CLDs either.  I have 2 GEMB accounts and a National City Visa.

I wonder if the CLD are random in the sense they need to reduce the variable credit by X% so they just pick people at random or some other non-credit reason.

This assumes that the CLD are really not justified based on what in the person's report.

[kimg727]

Side note: I noticed my thread was moved.  Sorry about putting this in the FICO section...I put it there because the decrease is going to adversely affect my FICO.  My apologies. 

[haulingthescoreup]

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kimg727 wrote:
Side note: I noticed my thread was moved.  Sorry about putting this in the FICO section...I put it there because the decrease is going to adversely affect my FICO.  My apologies. 

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No prob. I moved it here because this board is where the CLD hysteria is, so you should get more responses here. You'll see.

[kimg727]

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@haulingthescoreup wrote:
If you can pay in full BEFORE your statement posts, it won't affect your scores. if you carry a balance, or if you wait until your statement posts with the balance due, your scores will be hit to varying degrees.

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The EFFCU credit card (since I have it tied into my checking and the rate is fixed at 5.9%) is the primary one I use.  On average, I charge about 5K a month on it.  90% of the time I pay if off but there are months if I fall short, I carry a balance.

The reduction in CL will, however, hurt my overall utilization because I have about 10K in outstanding revolving credit (I have 0% interest on home furnishings).

[score_building]

the notable difference here is that you were CLD by a CU which are not immune to CLD but are still a good deal more rare to hear about than when we hear another report of a bank CLD. rarer still to be seen with a credit profile like yours.  in an odd way, your outstanding record serves to highlight the fact that AA in this climate knows no bounds when it comes to scores, etc.  your current cl may still be among the higher of what they are currently willing to offer under their tightening guidelines.

in any case, sorry this happened, no doubt you'll bonce back with dispatch.  as you know, it seems now that almost everyone will be touched by the climate pressures before this crunch is over.  good to remember that some, like you, a fico high aciever!  will still have many options to mitigate this CLD by virtue of your stellar credit history.  the other slight oddity is  that CU's have a rep for being more communicative and honest on this topic, so how it happened without notice is a real disappointment.

in an other thread USAA was given props by some posters for announcing APR increases in advance and telling the truth about it, even though they are not a CU their terms and approach seems to me to be similar .

[marty56]

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@kimg727 wrote:

The reduction in CL will, however, hurt my overall utilization because I have about 10K in outstanding revolving credit (I have 0% interest on home furnishings).

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IMHO the cause for your CLD.  10k is a lot of CC debt regardless of income or available credit these days.

[score_building]

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@marty56 wrote:

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@kimg727 wrote:

The reduction in CL will, however, hurt my overall utilization because I have about 10K in outstanding revolving credit (I have 0% interest on home furnishings).

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IMHO the cause for your CLD.  10k is a lot of CC debt regardless of income or available credit these days.

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still considered a lot whether or not you PIF ?  well then, cash is king!