Credit Limit lowered after making large payment

[CorySoccer]

Hello all! 

New to the forum, so thank you all for the advice so far!  

Here's what happened.  I have a Home Depot credit card. My credit limit was $2,200.  My balance was pretty much right at the max limit.  For the past year or so I've been making regular payments.  I recently made a large payment in the amount of $1,500 to make my balance around $650.  A week later, Home Depot lowered my credit limit to $800.

I was furious.  After speaking with gobs and gobs of people who said it was because of something in my credit history (which isn't true because I monitor it constantly, and nothing negative was reported, in fact, in the past 2 months, my credit score has increased 60+points.  

I finally got a hold of a lady who basically said...when you made that large payment, we lowered your CL to just a little over your balance.  So I asked..."So, you're telling me, had I kept my balance at $2,200 and kept making the minimum (or close to it) payments, my limit would have stayed at $2,200?  She said, yep.  She said they aren't allowed to lower your credit limit to below your balance.  So I asked her, if I had only paid $1,000, leaving me with a balance of $1,200, you would have lowered my CL to about $1,300 or so? She said yep.

This is news to me.  

Anyone else heard of this?

So now the lowered CL will be reported to the credit bureaus.  My credit utilization percent will not be low as it would have been had I been able to keep the CL of $2,200.

Guess I'm just frustrated that my credit score will probably lower after paying off this card (I am going to pay the rest of it off here shortly). Who knows what they'll lower my credit limit to after I have a zero balance? What a $10 CL? lol

[Anonymous]

it is called balance chasing

once it is paid off there are a couple ways it could go:

account closure 

limit slashed even lower, maybe to 150-300?

nothing

you can CLI

I doubt your score would become lower from what it used to be as compared to now with the lower CL, since at either CL they were nearly maxed out. If you have other cards your total use may even be lower

Pay it to 0 and your scores would be better

[Anonymous]

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@CorySoccer wrote:

Hello all! 

New to the forum, so thank you all for the advice so far!  

Here's what happened.  I have a Home Depot credit card. My credit limit was $2,200.  My balance was pretty much right at the max limit.  For the past year or so I've been making regular payments.  I recently made a large payment in the amount of $1,500 to make my balance around $650.  A week later, Home Depot lowered my credit limit to $800.

I was furious.  After speaking with gobs and gobs of people who said it was because of something in my credit history (which isn't true because I monitor it constantly, and nothing negative was reported, in fact, in the past 2 months, my credit score has increased 60+points.  

I finally got a hold of a lady who basically said...when you made that large payment, we lowered your CL to just a little over your balance.  So I asked..."So, you're telling me, had I kept my balance at $2,200 and kept making the minimum (or close to it) payments, my limit would have stayed at $2,200?  She said, yep.  She said they aren't allowed to lower your credit limit to below your balance.  So I asked her, if I had only paid $1,000, leaving me with a balance of $1,200, you would have lowered my CL to about $1,300 or so? She said yep.

This is news to me.  

Anyone else heard of this?

So now the lowered CL will be reported to the credit bureaus.  My credit utilization percent will not be low as it would have been had I been able to keep the CL of $2,200.

Guess I'm just frustrated that my credit score will probably lower after paying off this card (I am going to pay the rest of it off here shortly). Who knows what they'll lower my credit limit to after I have a zero balance? What a $10 CL? lol

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Yep,

As the previous poster stated, it's called balance chasing.  Basically, the creditor sees something in your profile or in your spending/payment behavior that spooks them (perhaps specifically during the economic climate we find ourselves in with the pandemic) and as a result is using this as an opportunity to reduce their exposure with you.

It could be that they feel if you charged the card up again, you wouldn't be able to pay it off, so they are making sure that doesn't happen.  Based on my experience, they'll continue to cut it as you pay it off until its either closed or the limit is really low.  As the other poster said, there's not much you can do except either decide if you want to pay it off, close the account, or take the chance of requesting CLI down the road but they will likely decline as it seems they have made their decision.

For what it is worth, it does happen, and it's happening more often than usual due to the economic circumstances a lot of people find themselves in.

[Anonymous]

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@CorySoccer wrote:

Hello all! 

New to the forum, so thank you all for the advice so far!  

Here's what happened.  I have a Home Depot credit card. My credit limit was $2,200.  My balance was pretty much right at the max limit.  For the past year or so I've been making regular payments.  I recently made a large payment in the amount of $1,500 to make my balance around $650.  A week later, Home Depot lowered my credit limit to $800.

I was furious.  After speaking with gobs and gobs of people who said it was because of something in my credit history (which isn't true because I monitor it constantly, and nothing negative was reported, in fact, in the past 2 months, my credit score has increased 60+points.  

I finally got a hold of a lady who basically said...when you made that large payment, we lowered your CL to just a little over your balance.  So I asked..."So, you're telling me, had I kept my balance at $2,200 and kept making the minimum (or close to it) payments, my limit would have stayed at $2,200?  She said, yep.  She said they aren't allowed to lower your credit limit to below your balance.  So I asked her, if I had only paid $1,000, leaving me with a balance of $1,200, you would have lowered my CL to about $1,300 or so? She said yep.

This is news to me.  

Anyone else heard of this?

So now the lowered CL will be reported to the credit bureaus.  My credit utilization percent will not be low as it would have been had I been able to keep the CL of $2,200.

Guess I'm just frustrated that my credit score will probably lower after paying off this card (I am going to pay the rest of it off here shortly). Who knows what they'll lower my credit limit to after I have a zero balance? What a $10 CL? lol

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@CorySoccer it apparently was something in your credit history, you had the card maxed out for a year only making small payments correct? If so, my guess would be that spooked them, especially in these economic circumstances, hence the balance chasing. 

[FinStar]

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@CorySoccer wrote:

Hello all! 

New to the forum, so thank you all for the advice so far!  

Here's what happened.  I have a Home Depot credit card. My credit limit was $2,200.  My balance was pretty much right at the max limit.  For the past year or so I've been making regular payments.  I recently made a large payment in the amount of $1,500 to make my balance around $650.  A week later, Home Depot lowered my credit limit to $800.

I was furious.  After speaking with gobs and gobs of people who said it was because of something in my credit history (which isn't true because I monitor it constantly, and nothing negative was reported, in fact, in the past 2 months, my credit score has increased 60+points.  

I finally got a hold of a lady who basically said...when you made that large payment, we lowered your CL to just a little over your balance.  So I asked..."So, you're telling me, had I kept my balance at $2,200 and kept making the minimum (or close to it) payments, my limit would have stayed at $2,200?  She said, yep.  She said they aren't allowed to lower your credit limit to below your balance.  So I asked her, if I had only paid $1,000, leaving me with a balance of $1,200, you would have lowered my CL to about $1,300 or so? She said yep.

This is news to me.  

Anyone else heard of this?

So now the lowered CL will be reported to the credit bureaus.  My credit utilization percent will not be low as it would have been had I been able to keep the CL of $2,200.

Guess I'm just frustrated that my credit score will probably lower after paying off this card (I am going to pay the rest of it off here shortly). Who knows what they'll lower my credit limit to after I have a zero balance? What a $10 CL? lol

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I'm confused, the thread in mid-December makes no mention of the Home Depot CC or it's balance, (based on the following comment and specifically post #8):

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Rebuilding-my-Credit-cancel-cards/m-p/620914...

"Regarding the 3 negatives on my credit report...1 is from Discover. It was a charge off for $3,200 which is due to come off in April 2021. The other two are collections for $300 from TXU Energy, and the other is $117 from a past bill from 4 years ago.

All of my cards have zero balances and I don't roll over anything from month to month."

[Getty59]

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@FinStar wrote:

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@CorySoccer wrote:

Hello all! 

New to the forum, so thank you all for the advice so far!  

Here's what happened.  I have a Home Depot credit card. My credit limit was $2,200.  My balance was pretty much right at the max limit.  For the past year or so I've been making regular payments.  I recently made a large payment in the amount of $1,500 to make my balance around $650.  A week later, Home Depot lowered my credit limit to $800.

I was furious.  After speaking with gobs and gobs of people who said it was because of something in my credit history (which isn't true because I monitor it constantly, and nothing negative was reported, in fact, in the past 2 months, my credit score has increased 60+points.  

I finally got a hold of a lady who basically said...when you made that large payment, we lowered your CL to just a little over your balance.  So I asked..."So, you're telling me, had I kept my balance at $2,200 and kept making the minimum (or close to it) payments, my limit would have stayed at $2,200?  She said, yep.  She said they aren't allowed to lower your credit limit to below your balance.  So I asked her, if I had only paid $1,000, leaving me with a balance of $1,200, you would have lowered my CL to about $1,300 or so? She said yep.

This is news to me.  

Anyone else heard of this?

So now the lowered CL will be reported to the credit bureaus.  My credit utilization percent will not be low as it would have been had I been able to keep the CL of $2,200.

Guess I'm just frustrated that my credit score will probably lower after paying off this card (I am going to pay the rest of it off here shortly). Who knows what they'll lower my credit limit to after I have a zero balance? What a $10 CL? lol

---

I'm confused, the thread in mid-December makes no mention of the Home Depot CC or it's balance, (based on the following comment and specifically post #8):

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Rebuilding-my-Credit-cancel-cards/m-p/620914...

"Regarding the 3 negatives on my credit report...1 is from Discover. It was a charge off for $3,200 which is due to come off in April 2021. The other two are collections for $300 from TXU Energy, and the other is $117 from a past bill from 4 years ago.

All of my cards have zero balances and I don't roll over anything from month to month."

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[CorySoccer]

@FinStar Thanks for the trip down memory lane .  I didn't feel the need to explain the whole back story, but since you insist, this Home Depot card is my wife's card and when I was working on my credit I was added as an authorized user since it had been opened for a long time with regular on-time payments made to it.  I was keeping the situation simple since that information is irrelevant to the question I had asked which was paying down a card resulting in a decreased credit limit.  The information provided was accurate information from my wife and I's credit profile.

[CorySoccer]

@Anonymous @Getty59 @Anonymous @Anonymous Thanks for the information about this "balance chasing" you speak of. In the eyes of the lender (cc/bank etc...) I guess it makes sense if there has been a history of high credit utilization on said card or on other cards.  It's now paid off, along with the one other card that was near it's max.  How that will affect those cards' credit limits is anyones guess, but having those two cards paid off in full, regardless, is nice to be out from under.

[Jnbmom]

@CorySoccer 

Well you stated "your card" so it was assumed it was your profile and back ground info is usually relevant when giving advice .

[HeavenOhio]

@CorySoccer, the "something in your credit history" was this card. It hung around its limit for about a year without the balance declining appreciably. I think the underwriting process probably had you flagged for a CLD (credit limit decrease) even before your payment.

While the terms of the card allow for this type of payment situation, underwriting isn't always happy. Some banks tolerate protracted high balances without making them a big deal. Others are pretty fussy. Based on fuzzy memory, I think Citi falls somewhere in between the two extremes.

If you feel the need to drag out a balance, it pays to come here and talk about it. It might be that Card X is a better choice than Card Y for carrying a balance for a few months.