Credit limits decreased!

[Anonymous]

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@Anonymous wrote:
The point really isn't what FICO considers this or that. The point is that high UTIL statistically indicates that you will have a higher likelihood of defaulting on a credit obligation. By definition FICO scoring measures the statistical likelihood of your defaulting on a debt within the next two years. You don't have to know what the factors are for the model to be correct. That's true whether you know them or not. The predictive power of statistical models like FICO scores is remarkably high. If you stray from the straight and narrow it's not FICO's problem or your issuer's - it's yours. Continuously running high UTIL on your CC's has never been a good idea. Not ever.

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1.  According to you.  And according to FICO.  And according to lenders

2.  Not according to lenders (Oh, is it possible lenders are two-faced??).  The same lenders who establish credit limits, 0% interest for life plans and 3% minimum payments. 

Of course, the overwhelmingly vast majority of credit card users only learn about #1 through either osmosis or when they suffer an AA.

[Anonymous]

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O6 wrote:

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creditwherecreditisdue wrote:
The point really isn't what FICO considers this or that. The point is that high UTIL statistically indicates that you will have a higher likelihood of defaulting on a credit obligation. By definition FICO scoring measures the statistical likelihood of your defaulting on a debt within the next two years. You don't have to know what the factors are for the model to be correct. That's true whether you know them or not. The predictive power of statistical models like FICO scores is remarkably high. If you stray from the straight and narrow it's not FICO's problem or your issuer's - it's yours. Continuously running high UTIL on your CC's has never been a good idea. Not ever.

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1.  According to you.  And according to FICO.  And according to lenders

2.  Not according to lenders (Oh, is it possible lenders are two-faced??).  The same lenders who establish credit limits, 0% interest for life plans and 3% minimum payments. 

Of course, the overwhelmingly vast majority of credit card users only learn about #1 through either osmosis or when they suffer an AA.

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So wrong. If you want to creatively confuse BT and non-BT balances that is of course your prerogative. However, it is a distinction without a difference. Your other issuers don't know which is which - and that is what matters. Balances are balances. I don't run a BT on a card at higher than 35% UTIL for that reason.

Also, it doesn't matter what credit card users know and don't know. It is their behavior that matters! If you behave in a manner that produces continuously high UTIL patterns you are a higher default risk.

[Anonymous]

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@Anonymous wrote:

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O6 wrote:

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creditwherecreditisdue wrote:
The point really isn't what FICO considers this or that. The point is that high UTIL statistically indicates that you will have a higher likelihood of defaulting on a credit obligation. By definition FICO scoring measures the statistical likelihood of your defaulting on a debt within the next two years. You don't have to know what the factors are for the model to be correct. That's true whether you know them or not. The predictive power of statistical models like FICO scores is remarkably high. If you stray from the straight and narrow it's not FICO's problem or your issuer's - it's yours. Continuously running high UTIL on your CC's has never been a good idea. Not ever.

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1.  According to you.  And according to FICO.  And according to lenders

2.  Not according to lenders (Oh, is it possible lenders are two-faced??).  The same lenders who establish credit limits, 0% interest for life plans and 3% minimum payments. 

Of course, the overwhelmingly vast majority of credit card users only learn about #1 through either osmosis or when they suffer an AA.

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So wrong. If you want to creatively confuse BT and non-BT balances that is of course your prerogative. However, it is a distinction without a difference. Your other issuers don't know which is which - and that is what matters. Balances are balances. I don't run a BT on a card at higher than 35% UTIL for that reason.

Also, it doesn't matter what credit card users know and don't know. It is their behavior that matters! If you behave in a manner that produces continuously high UTIL patterns you are a higher default risk.

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You are off on another tangent.

Nobody is saying that it is ever a good idea to depend too heavily -- if at all -- on your credit limit.  In fact, carrying a balance at all is seldom a good idea.  But only an extremely small percentage of credit card card users know or understand this precisely because credit card issuers specifically and purposely lead them to believe otherwise. 

This should not be rocket science for anybody:

Why do banks stress in their marketing 3% (at most) minimum payments?

Why do banks stress 0% rates for life on BTs?

Why do they stress 0% purchase APRs for 6 months?  For a year?

Why do they push ridiculously high credit limits?

Credit card issuers do virtually nothing to educate or inform their customers that having high UTIL is not good and, in fact, push policies and programs that encourage high UTIL  When the customer then uses the limit that their credit company says they deserve, the bank cuts them off at the knees -- after, of course, having earned the merchant fees and interest.  

Again, let me try and make this simple so everybody can understand: Even though having a high balance is not good, the credit card companies deserve part of the blame.  They should educate their cardholders and enact policies to encourage their cardholders to act accordingly. 

In that light, although OP has suffered AA as a result of non-optimal choices made in managing his credit accounts, I do understand his frustrations and concerns.  If you can't empathize with that then, well ... that's just you.

[Anonymous]

No tangent whatsoever.

It's not that you use your credit limits - it's how you use your credit limits that matters. Stop trying to scapegoat the the CC issuers for cardholder's behavior. Cardholder's behavior - cardholder's responsibility. If a cardholder systematically runs up their UTIL and keeps it run up that's a manafestion of his behavior which FICO is rightfully measuring as he has increased his likelihood of default. Also, since the cardholder's likelihood of default is increased his credit is corresponding degraded.

You seem to think it's the issuers responsibility that a cardholder isn't knowledgable as to the ways of perfecting credit. It isn't. Remaining out of touch credit concepts and trends is yet another manifestion of a cardholder's behavior. There's plenty of information available in the public domain. All one has to do is seek it out.

[Anonymous]

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@Anonymous wrote:

No tangent whatsoever.

It's not that you use your credit limits - it's how you use your credit limits that matters. Stop trying to scapegoat the the CC issuers for cardholder's behavior. Cardholder's behavior - cardholder's responsibility. If a cardholder systematically runs up their UTIL and keeps it run up that's a manafestion of his behavior which FICO is rightfully measuring as he has increased his likelihood of default. Also, since the cardholder's likelihood of default is increased his credit is corresponding degraded.

You seem to think it's the issuers responsibility that a cardholder isn't knowledgable as to the ways of perfecting credit. It isn't. Remaining out of touch credit concepts and trends is yet another manifestion of a cardholder's behavior. There's plenty of information available in the public domain. All one has to do is seek it out.

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I'm sorry if I wrote in a way that caused you confusion.

CCCs share part of the blame.  Again, it should not be difficult for a reasonable person to see that CCCs encourage irresponsible behavior.  One of the salient features of our legal system is that enticement equals shared responsibility. 

Credit card applicants are under no duty, real or imaginary, to search the web to obtain data about whether or not they should trust or distruct their credit card issuer's marketing gimmicks.  You seem to enjoy creating obligations that simply do not exist, nor ever have.  Using your logic people in Love Canal are guilty of causing their own medical maladies because they failed to conduct research to prove that the claims made my local polluters and their local government were bogus.  Even implying such an obligation exists is, at best, irresponsible.

CCCs fought tooth and nail against even simple provisions of The CARD Act that require disclosures over the consequences of making mimimum payments.  Once they entice you into using your entire credit limit and making minimum or close to minimum payments, they have you pul the throat and then, only to ensure you do not default on your debt to them, they cut your limit to ensure that they rope they gave you is only enough to keep you alive well enough to pay them back.  Once you get your balance paid off, then you can get them to raise your limits back up and start the cycle again. 

I like the new FRB Regulation Z.  A part of this regulation instructs credit card issuers how to calculate whether or not a borrower can afford new credit.  CCCs nagged and moaned to ensure that when calculating the impact of a new credit line on a borrower that they only be required to use mimimum payment + interest in the equation.  If, as you amusingly would have us believe, CCCs are innocent in the reprehensible practice of encouraging massive debt to the nth degree, why not use, say, 10%?  Or even 20%  BTW, the question is rheorical because I know many won't understand anyhow.

[MattH]

My wife calls the credit card companies "credit pushers" because they get people addicted to spending more than they earn.  But they only have power over you because you allowed them do gain that power; if you don't have any balances then it does not matter what interest they charge.  Most of the world has been spending beyond its means for over a decade and now the day of reckoning has come.  Please do not complain to us because we give you honest answers; would you really prefer for us to sugarcoat our answers?  The truth is, running up that amount of revolving debt took time and getting it back under control is going to take both time and self-discipline.

[Anonymous]

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@MattH wrote:

My wife calls the credit card companies "credit pushers" because they get people addicted to spending more than they earn.  But they only have power over you because you allowed them do gain that power; if you don't have any balances then it does not matter what interest they charge.  Most of the world has been spending beyond its means for over a decade and now the day of reckoning has come.  Please do not complain to us because we give you honest answers; would you really prefer for us to sugarcoat our answers?  The truth is, running up that amount of revolving debt took time and getting it back under control is going to take both time and self-discipline.

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Are you drunk on Kool-Aid? I might have complained,but you never posted anything relevant about my situation in the entire thread or gave an honest answer to anything.

I did not live beyond my means. It did not take a long time to run up the debt. It is not out of control. Did you study my debt chart and income? I paid off $20k in the last two months. That is why I'm pissed.

Your interest rate charge comment is laughable. It does matter unless you're foolish. I took Discover cards $10k balance transfer offer (push) combined it with some other cash and put it in a mutual fund that has did quiet well. I did the same with Citigroup. When citi threatened to raise all their customers to 15% or more (after they took $60 billion in tax payers money) I had no choice but to opt out and keep the low interest rate.

Sure the ccc preach fiscal responsibility but don't konw the meaning. They get bailed out and then stick it to those that still pay.

I pay because I can. Not out of any moral obligation. The whole Fico score system is a joke. If it worked, why did tens of thousands default? Why didn't it catch them sooner.

What flavor is your Kool-Aid?

[Anonymous]

You pay because you have a legal obligation to do so. To do otherwise would become quite inconveniencing for you.

[Anonymous]

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@Anonymous wrote:
You pay because you have a legal obligation to do so. To do otherwise would become quite inconveniencing for you.

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you're wrong. I don't have to pay. It would be an inconvenience I could live with. I could take the risk that the cccs would never sue and if they did they would most likely never collect.

Like most key board jockies, you have taken a pious position and can't see the meaning of the rule.

Keep protecting and giving your tax money to the ccc (did you like and defend that?) and I'll keep going to my senators to help the consumer. The consumer is always right except in the cc industry and fico.

[Anonymous]

One more thing, what about the company that called me and said they were raising everyone's % across the board 3%? Had nothing to do with anytimg I did and they didn't run a cc. Now, do I cancel and take the util hit or pay the higher %?

These are things that effect fico and future purchases. They shouldn't. Should be outlawed.