Preventing from CLD?

[DigitalArk]

What is the effective method?

[Anonymous]

Like FR, CLD are rare and usually only happen for "good" reason.  Don't do things that tank your score, behave in ways that create concerns (lots of requests for credit, very large balances, maxing out cards etc) and for some issuers, use the cards regularly at some reasonable portion of CL.

[DigitalArk]

You mentioned, "Lots of requests for credit..." Now, this is contradicting to app spree, correct? I have opened 7 new credit card accounts in the past 5 months. Does it mean I have more chances to be CLD?

[Anonymous]

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@DigitalArk wrote:
You mentioned, "Lots of requests for credit..." Now, this is contradicting to app spree, correct? I have opened 7 new credit card accounts in the past 5 months. Does it mean I have more chances to be CLD?

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Disclaimer:  I do not work for any financial institution and so am not privy to their risk detection algorithms.

But generally it will be a set of factors that tip the balance, so with a thick file, great scores, low balances etc, app sprees are not a problem usually.  If you only have a little history, are maxed out on your cards, and suddenly start applying for much more credit, that might raise red flags.

All the bank wants to do is to avoid risk, they are not looking for random people to cut (they profit from your business) so just think what might look to a creditor as a pending sign of trouble.

None of the details are public of course, to avoid people working out how to circumvent controls.

[DigitalArk]

It makes sense. Thank you!

[enharu]

You can get CLD for many reasons.

Opening too many accounts and having too many recent inquiries can result in AA, because to lenders that's just risky behavior. A normal person doesn't go around adding this many cards in a short period of time. It makes that individual seem desperate for credit.

Having extremely high utilization for extended periods of time while making only small payments can also result in AA.

Adding new loans or revolving debt which puts one over the bank's DTI threshold can also result in AA. This is mostly a debt / income problem. If your debt is insignificant to your income, then no worries.

Having too much credit relative to income. Banks may take AA to reduce risk exposure then.

Fraudulent / risky activity. Filing excessive numbers of claims, disputes, or abusing certain perks, such as insurance and also including but not limited to excessive manufactured spending, can result in AA as well, or even be blacklisted in extreme circumstances.

And many others of course. These are just a few "main" reasons people usually get AA for.