Help! Credit limit drastically slashed

[sarge12]

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@NRB525 wrote:

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@Remedios wrote:

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@HighAchiever wrote:

I don't think so, because I believe a closed account with a balance is factored into the algorithm as if it is a maxed out account at 100% vs a lower percent of the available limit of an open account. Hopefully someone else can respond to verify...

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That depends on who you ask 

Some believe that closed accounts in good standing are not scored at 100% utilized . More like the utilization (the dollar amount) counts against aggregate utilization, but limit is no longer counted towards it. If account is closed as a result of AA and issuer is not even reporting what the limit was, then it's utilized at 100%.

Others believe every closed account is considered to be 100% utilized. 

It's still a sore topic, many threads in scoring forum can attest to that lol 

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I do not believe a closed account trips into "100% utilization" by default. There is a thread in the Understanding FICO Scoring board, where I added an experiment late in 2018. I BT'd a $500 card to 90%, and a larger card over 50%, while I have a closed card at around 10% utilization. The score was impacted by the other two cards, then recovered when the two cards had utilization reduced. If the closed card were counted at 100% utilization, my score would already be tanked by that. I am at around 830 consistently these days.

In the case of OP, with the balance chasing, the cards are nearly maxed out anyhow. Closing them will not remove the maxed out situation, so no, closing the card won't help utilization, but what I'm saying is, if a card is in low utilization, closing it with balance won't make it 100% utilization. If the card is at 99% utilization, open or closed, that's the reality. My situation is different (and some other closed cards can be) where the utilization on that card is in the range of 10% or less.

FWIW I was balance chased by BofA on two large balance cards. They kept following me down, as I made minimum / more than minimum payments as part of my overall pay-down of debt. Every few months I'd get a letter with the limit decrease notice. After the balances came down to a level BofA was happy with, the balance chasing stopped. I knew this finally because one of the cards ended up getting a $4,000 auto CLI one day.

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This is interesting...but if it was closed and reported the final credit limit, would it not stop it from remaining at 100% due to them not continuing with the balance chasing? Surely they would not continue to lower the credit limit after closure every time a payment was made.

[sarge12]

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@Revelate wrote:
Not to argue but a single maxed out tradeline that doesn’t materially impact aggregate utilization isn’t a big deal.

Once upon a time when I tested on EQ FICO 8 it was -7 at $240/250.

Didn’t get any further cause Discover graduated me .

Given that any credit card balance that is accruing interest is financial bleeding, address it anyway. Scoring impact is intellectual proverbial self-gratification in comparison I would suggest... admittedly I engage in that a lot on this forum but assuming it’s your highest APR card start paying it down, and if it’s not pay down something else first and get to it eventually imo.

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This explains a lot, because I have one card that is super low interest that is only used, and paid by my sister who is an AU on the account. All other cards are usually PIF before a statement cuts, but sometimes a balance does report before paid. The card my sister uses is over 50% utilization, and I have not seen it making a huge dent in my score. This explains why, as my aggregate is always under 4% even with this 5200/10000 dollar balance reporting.

[Anonymous]

I would email and request a call back from a supervisor. The reason is a front line CS person cannot help you. Also your ability to get in contract with someone who can, is limited by the gatekeeper (the CS person). 

You want to find out exactly what their plan is. Someone suggested you call before you pay. Do that. If you are being balance chased it makes no difference if you pay if off ASAP or as you normally would. In the end it will be the same result.

btw its usually not one late payment. Something about your account triggered this. escalating balances and only paying the minimum for example will flag your account to be on the lookout for a late payment. Late payment, then the bank reduces their exposure. So it may seem perplexing that one late payment triggered this but it is usually not.

[Brian_Earl_Spilner]

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@K-in-Boston wrote:

Just to chime in on closed accounts with balances, it can go one of four ways. It depends on how the lender reports the balance and available credit on the closed account. It will differ by lender, so there is no one size fits all answer for that. That’s why there are disagreements on these forums about what happens; everyone is right yet no one is wrong when it comes to this.

I would advise against ever closing an account with a balance. Sometimes lenders make that choice for you, though. The worst case scenario is that a balance is reported with a $0 credit line, which means the balance is factored into your overall ultilization but the credit line is not. FWIW all BoA accounts that I have closed (without a balance and in good standing) continued to report the original credit line.

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Medulla...oblongata

[Kforce]

Isn't @K-in-Boston really MyFico ?

[Anonymous]

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@thornback wrote:
Well since it seems you were more than 30 days late (or was it 60 days?) you'll also have a late payment hit on your reports to deal with - and it will take approx 2 years for your scores to recover from that alone.

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A 30 day late won't be recovered from in 2 years time.  If it's present on your CR, it is adversely impacting your scores.  Around 2/3 of the points lost initially are typically returned around 2 years, but the remaining 1/3 of the points will be lost for the remaining 5 years or until the late payment is off of the CR.

[Brian_Earl_Spilner]

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@Kforce wrote:

Isn't @K-in-Boston really MyFico ?

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No, he's Delta. You should see his socks.