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Total Credit Limit versus Income ?

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Senior Contributor

Re: Total Credit Limit versus Income ?


@Revelate wrote:


Well banks also knew what markets were imploding.

 


Yeah, Recessions don't affect all cities the same way. "Local Variations"  

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Message 51 of 54
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Moderator Emeritus

Re: Total Credit Limit versus Income ?


@GApeachy wrote:

@Revelate wrote:


Well banks also knew what markets were imploding.

 


Yeah, Recessions don't affect all cities the same way. "Local Variations"  


Even expand to say regional areas may be affected by outside forces. Example, I live in a mining area that is essentially foreign owned. We experience a more global market place and are driven by the world markets (not local or US).

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Message 52 of 54
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Established Contributor

Re: Total Credit Limit versus Income ?


@Revelate wrote:

@tacpoly wrote:

Well, somehow the folks I know escaped the widespread credit limit slashing during the Great Recession.  I thought it was because we paid our cc bills in full and went on with life like normal (actually, a few people spent more because of crazy sales -- remember when Saks took 80% off everything?! -- and availability of luxury goods.)  But if credit card companies were willy-nilly cutting limits for everyone, then it was sheer good luck. 


Well banks also knew what markets were imploding.

 

It's entirely possible based on your zip code that you weren't considered risky, or maybe based on your mortgage balance (which doesn't have the same nasty red-lining connotation).  Probably the second one, if you have paid off 50% of the mortgage it's unlikey you're going to go under water enough for the bank to lose money.  Also I'd note if your buddies were buying / upgrading / investing, that's a large difference than the legions of people we read about living paycheck to paycheck, you're in the minority on that front certainly.

 

I know that stories on this forum have to be taken with a grain of salt in that they're never 100% complete even when the intention is to be completely transparent (we don't hear the lender's side of the story), but they were so prevalent and going on the premise that even cliches have a grain of truth, it's hard to argue there wasn't a big backlash from the lenders when they started tightening their belts.


So now you are saying there are exceptions to the credit slashing based on markets.  Well, my friends in the SF Bay Area also did not experience any credit limit decreases -- and that market suffered a bit more than Manhattan in the recession.  Could bank decisions on reducing and limiting credit actually be based on each person's financial health and not as sweeping and comprehensive as you say it was.

 

I know credit standards were increased and mortgage lending requirements tightened (we were asked to put at least 30% down and show 3 years of cash reserves when we purchased several properties during the great recession).  Credit card companies also increased credit requirements and those people who fell through (people who probably were already on the lower end of acceptable or people who had higher than prudent debt to asset ratio) saw their limits cut.

Message 53 of 54
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Senior Contributor

Re: Total Credit Limit versus Income ?

This thread is dead....it's veered way off the OP.  Mods please close.

”MY TAKE HOME PAY DON’T TAKE ME HOME”
Message 54 of 54
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