Opinions on "High Balance."

[Anonymous]

I'm curious what all of you think regarding "High Balance" as shown on your revolving accounts.  I'm not talking with the lender with which the high balance itself is reported, as naturally that lender can see your entire account history, spend/payment patterns, etc.  I'm more referring to how other lenders may view or perceive your reported high balances.  I'm posing this question from the perspective of someone that follows the behavior of a Transactor and tends to PIF; I'm not talking about someone that carries balances that may or may not result in a greater "high balance" reported on any account.

For example, two otherwise equal individuals may have a CC with a $20k limit.  One of them has a "high balance" of $500 reported on their credit report, where the other has a "high balance" of $10,000 reported.  Assuming both of these individuals today have low current balances, say single-digit utilization, how do you all think outside creditors view the respective "high balance" reported for these two individuals?

One argument could be that the $10k reported high balance is a sign of strength with respect to creditworthiness.  That is, they had their reported balance that high at one point, but now it's back down to single-digit utilization.  Perhaps their spend is significant and their payments are significant as well.  This could be viewed as a "good" thing.

The converse argument would be that a balance reported that high could be a sign of increased risk.  I'm posing these "arguments" with the assumption of a clean profile... that is, these individuals have never been late on a payment.  

Anyway, does anyone think that having high [relative to limits] "high balances" reported is either a positive or a negative thing? 

[Schwartzinator]

It depends on whether or not trended credit data is provided with the report other lenders receive. As you mention, if it’s following patterns of heavy spend and large repayments there’s no logical reason to view it as a negative, but I can see where it may raise questions on why they’re relying so heavily on credit.

[Anonymous]

I would think that having high reported balance but now a lower owed balance would be viewed as positive by creditors, since it shows they are able to pay their balance down.

[Anonymous]

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@Anonymous wrote:

I would think that having high reported balance but now a lower owed balance would be viewed as positive by creditors, since it shows they are able to pay their balance down.

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That's sort of where my head was at on the subject, but would a creditor ever question why such a high balance was reported in the first place?  I really don't know.

[Thomas_Thumb]

If one has perfect payment history, I'd view high balances as positive indicators showing ability to handle debt load.

[Gmood1]

My thinking is the only thing the other creditors will question is '"How can we get BBS to use our cards the next time he spends like that?".

[Anonymous]

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@Gmood1 wrote:
My thinking is the only thing the other creditors will question is '"How can we get BBS to use our cards the next time he spends like that?".

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Which I guess, in theory, could cause other creditors to initiate a CLI, for example.

So, it seems the overwhelming opinion above is that higher "high balances" reported is a good thing, but only if you have perfect payment history. 

[Gmood1]

Yuppers!
I can tell you IME so far. The most aggressive creditors I've experienced in trying to grow their customer base are:
1. Amex, these guys want to grow their market share and they're not shy about it.
2. Synchrony bank
3. Bank of America
4. Navy Federal Credit Union
5. Capitol One, they were closer to the top until guidelines changed recently.
6. USAA
Out of all the National banks. Chase comes in dead last. They already control the majority. And don't seem concerned with fighting over the scraps. Lol

[Anonymous]

I agree with that list, at least with the creditors I have experience with on it.  The only asterisk I would mention is with respect to Capital One and that's if you start out with them with a starter account and a low score that the chances of that account growing significantly are very small.

I would also add Discover to the list.  While there are some people out there that say their Discover card doesn't grow, there are a ton that have taken around a $4000-$6000 SL to $30k-$50k inside 2 years, all from SPs.

[iced]

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@Anonymous wrote:

I'm curious what all of you think regarding "High Balance" as shown on your revolving accounts.  I'm not talking with the lender with which the high balance itself is reported, as naturally that lender can see your entire account history, spend/payment patterns, etc.  I'm more referring to how other lenders may view or perceive your reported high balances.  I'm posing this question from the perspective of someone that follows the behavior of a Transactor and tends to PIF; I'm not talking about someone that carries balances that may or may not result in a greater "high balance" reported on any account.

For example, two otherwise equal individuals may have a CC with a $20k limit.  One of them has a "high balance" of $500 reported on their credit report, where the other has a "high balance" of $10,000 reported.  Assuming both of these individuals today have low current balances, say single-digit utilization, how do you all think outside creditors view the respective "high balance" reported for these two individuals?

One argument could be that the $10k reported high balance is a sign of strength with respect to creditworthiness.  That is, they had their reported balance that high at one point, but now it's back down to single-digit utilization.  Perhaps their spend is significant and their payments are significant as well.  This could be viewed as a "good" thing.

The converse argument would be that a balance reported that high could be a sign of increased risk.  I'm posing these "arguments" with the assumption of a clean profile... that is, these individuals have never been late on a payment.  

Anyway, does anyone think that having high [relative to limits] "high balances" reported is either a positive or a negative thing? 

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I think people on this forum analyze and over-analyze their credit reports to an extent that reaches far beyond anything that most lenders would even consider doing (except possibly mortgage lenders).

That is to say, I barely notice the high balance on my accounts and I'm pretty sure banks don't really pay attention to it, either. Instead, I'm of the opinion that lenders are more apt to start lower with a new client and build an internal score (a la Chase) rather than jump in with both feet based on a black-box-from-the-outside view of someone's creditworthiness. They'll note the key metrics (score, income, late payment history, overall utilization) but I doubt they're playing the guessing game as to whether someone is a risk or a whale. If the key metrics warrant a credit line, grant it and if it turns out to be a whale, it's easy to raise the limit later.