Help! Credit limit drastically slashed

[sarge12]

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@longtimelurker wrote:

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@Anonymous wrote:
I actually don’t know if it was even 30 days. My Credit Karma account shows Bank of America reporting all payments were made on time, so I think it may have been <30 days late when I paid. So basically there’s is no way to get them to re-increase my limit? 

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Unfortunately, that's not the immediate goal: you are being balance chased, which means each time you pay, the bank will reduce the CL to just above the remaining balance, until they close the card.   So that is what the advice above was meant to help with.   If you have paid one card much more down, you a) could have made them happier so they are more likely to listen, or b) weakened your position dramatically (they now have a lot of their money) and they proceed as planned!

So talk to them ASAP to see what can be done.

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Now I have a question...could it be beneficial to actually close the account even with a balance, but continue to pay it as agreed? Since it would no longer be an open account would doing so remove it from being figured into revolving utilization or would the balance still be figured in, but not the credit limit?

[HighAchiever]

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...

[Brian_Earl_Spilner]

It still counts, just like a collection. It will also affect DTI still.

[Remedios]

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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 

[Anonymous]

Good to know. Thanks

[Shooting-For-800]

Call them.

Call them again.

Call them again.

Email them.

Email everyone on the planet with a BOA address.

Mail them.

Mail everyone.

Explain the simple mistake and beg for forgiveness and your CL restored.

Can't hurt.  GL!

[NRB525]

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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.

[K-in-Boston]

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.

[Revelate]

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.

[Anonymous]

I would strongly encourage you to call them, explain what happened and tell them you will schedule automatic payments to ensure this never happens again.  I doubt you will get your limits back but the goal is to not get the cards cancelled.  Lenders get nervous when they see a combination of high utilization and slow or late payments.  I would absolutely ask them how late you were.  If they are not 30 days or more than you can recover fairly easily (not limits but overall scores and profile). 

The best thing to do is call, learn the exact information, explain to them what happened and what your doing to ensure it never happens again and then see what if anything they do.