@tacpoly wrote:So the trick is to remove any reason for ccc to see you as a(n increased) risk, specially when their tolerance for risk is greatly diminished.
I would imagine having high CL's not in relation to your income would be seen as a risk by lenders.
@Anonymous wrote:
Something I read in another thread reminded me of my experience in 2008/2009 and I started wondering how common it was and if there were a way to prepare for it. I mean... Other than having cash reserves.
In 2007 I thought I was smart... I had about 10k worth of 2k cards (citi, Barclay, several wamu, a couple bofa) and a utilization of about 50% and a credit score of 640...i knew I was supposed to be below 30%... But like I said, I thought I knew what I was doing... Paying all that stupid interest per month.
When people started going on TV saying the sky is about to fall... I put in CLI requests with all my cards... I mean, I'm already carrying a balance. What if the sky falls, I might need the cushion..it seemed smart at the time. Most if not all of these were denied.
Very shortly after, related to the CLIs or otherwise, one of my cards decided to balance chase. Immediately after the rest of my cards saw my new extra high balance, the rest balance chased as well... It was a race to the bottom, and I lost.
If I needed the credit for cushion... Well... It was never available to me when it could have been useful. Luckily, I never lost my job, though my income did contract for a bit.
Just to be clear... I never missed a payment. Even the cards that chased me all the way to 0...i paid them all off in full. I still have my home depot card that never closed me out. None of them had missed payments. The adverse actions were due to the general economy and possibly exasperated by my profile, utilization and subsequent snowballing from AA.. But not missed payments.
FF to today... I have close to 100k in available credit with about 10% utilization which should be paid off soon. Had 0% before some unexpected expenses during the summer. If we had another recession... I have a much better cushion... not necessarily to spend high utilization, but, more than I had last time.
I know none of us can tell the future... I hope we don't see anything like 2008 again in my lifetime, however... The standard boom and bust cycle we've been on for decades has people who are smarter than me saying we are close to the peak of our bull market. I'm inclined to believe that much as a general statement.
So... First question... For those "smart" people like me back then, who carried too high a balance but DIDN'T do CLIs when bad news was on tv... Was the balance chasing across the board pretty common?
Second question... People who were closer to my current position with low utilization ... Did you fare better... Or did they balance chase everybody?
Basically, what's the best and worst case scenario? I'm assuming they didn't balance chase and cancel every cc holder in the country... But maybe they did. How many people made it through with no AA at all, or very minor... What did it take?
It's not comfortable for me to say this but the reality is that the more you owe, the more exposed you are when the economy goes in the tank. As you yourself have experienced, the banks who were once begging you to borrow from them are not your friends, and will turn on you on a dime. Having high credit limits will probably be no comfort at all, because, as you have also experienced, the bank can take them away whenever they feel like it. So yeah, I would want to have the highest possible credit limits, so that if the bank did a CLD it might not wipe out all your credit. But I don't think it counts as security in any way to have them.
