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overlimit matter when CLI?

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Regular Contributor

overlimit matter when CLI?

Hello,

 

I have previously been over my balance on two cards.... one about $5 and the other about $15. I now have gotten credit line increases on both cards at this point. Does the over limit reporting still matter?

 

Please let me know if I am not doing a good job of explaining my question.

 

Thank you!

Starting Score (Oct '13): 473 (EX), Current Score: MyFICO EX: 713 EQ: 715 TU: 717, Goal Score: 740 & above. Capital One Quicksilver: $2250, Discover IT: $9500, Chase Amazon Store Card: $2600, Care Credit: $15000, Barclays Rewards: $1850 BCE: 20,000, PenFed Visa Sig: 7,000 NFCU cashRewards $24,600
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Frequent Contributor

Re: overlimit matter when CLI?

Technically the information is noted, however utilization is a snapshot in time.  Once done, it's forgotten.  In my experience it's never hurt once its eliminated.  It's obvious youre handling your business if they are giving you CLI's. I wouldn't let it spoil your weekend if it's a rare occurrence.   ymmv of course  Smiley Wink

FICO 8:  EQ:687  TU:728  EX:735
Message 2 of 8
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Regular Contributor

Re: overlimit matter when CLI?

Thank you so much!
Starting Score (Oct '13): 473 (EX), Current Score: MyFICO EX: 713 EQ: 715 TU: 717, Goal Score: 740 & above. Capital One Quicksilver: $2250, Discover IT: $9500, Chase Amazon Store Card: $2600, Care Credit: $15000, Barclays Rewards: $1850 BCE: 20,000, PenFed Visa Sig: 7,000 NFCU cashRewards $24,600
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Super Contributor

Re: overlimit matter when CLI?

I have a dumb question, which is: How is it even possible to go over one's limit?  If that truly is the limit, then don't transactions that would put you over get declined?

 

I have a guess as to the answer and maybe the OP can tell me if I am on the right track.

 

Suppose I have a $1000 credit limit.  I charge up to $997, much of which may have been carried from the previous month.  Then the statement cuts and I am charged $10 of interest.  My balance is now $1007 ($7 over).  Is that what happened?

 

I have never been close to my CL and and have never carried a balance so I am shooting in the dark.  Is my guess right?

Message 4 of 8
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Valued Contributor

Re: overlimit matter when CLI?


@CreditGuyInDixie wrote:

I have a dumb question, which is: How is it even possible to go over one's limit?  If that truly is the limit, then don't transactions that would put you over get declined?

 

I have a guess as to the answer and maybe the OP can tell me if I am on the right track.

 

Suppose I have a $1000 credit limit.  I charge up to $997, much of which may have been carried from the previous month.  Then the statement cuts and I am charged $10 of interest.  My balance is now $1007 ($7 over).  Is that what happened?

 

I have never been close to my CL and and have never carried a balance so I am shooting in the dark.  Is my guess right?


While interest and fees can certainly put a card over-limit, it's also fairly common for cards to be "NPSL" even with a nominally-defined limit. (Sometimes this is a listed "feature" of the card, other times it's just silently allowed...)

 

In those cases, you'd be allowed (based on the lender's real-time risk analysis) to charge over the limit (potentially WAY over the limit), but usually are expected to pay it at least back to under the nominal limit with the next bill.

 

Under current scoring models, once the over-limit condition is gone, there isn't any ongoing damage from the reported High Balance on the tradeline being above the Credit Limit. (While the card is still reporting over-limit there is a marked negative effect, of course.)

EQ8:850 TU8:850 EX8:850
EQ9:850 TU9:850 EX9:850
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Regular Contributor

Re: overlimit matter when CLI?

This isn't dumb, I had the same question when it happened to me. The previous poster is correct. 

 

 

I thought, well if there isn't credit, it will decline. It didnt, that was the $5 over limit charge. The 2nd was the scenario that you mentioned, which I could've avoided by watching the account and paying it down before the interest was listed. Nonetheless, I know better now Smiley Happy

Starting Score (Oct '13): 473 (EX), Current Score: MyFICO EX: 713 EQ: 715 TU: 717, Goal Score: 740 & above. Capital One Quicksilver: $2250, Discover IT: $9500, Chase Amazon Store Card: $2600, Care Credit: $15000, Barclays Rewards: $1850 BCE: 20,000, PenFed Visa Sig: 7,000 NFCU cashRewards $24,600
Message 6 of 8
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Super Contributor

Re: overlimit matter when CLI?

Many thanks to iv for the thoughtful explanation.

 

Since my "interest charge put me over" theory was right in one case, that certainly must mean you were carrying a balance and that probably you were carrying a big balance month to month.

 

The two mantras we often give on the forum, which is that FICO only sees a snapshot in time and FICO has no memory -- they are still true (for FICO 8 and earlier certainly).  But it doesn't mean that the CRA data only has a snapshot in time.  Quite the contrary, for most of your cards it shows how much your statement was for each month and of that amount how much you subsequently paid -- for the last 24 months, every month.  That's 24 snapshots.  And more importantly lenders and creditors can access that history of balances and payments.  Mortgage lenders especially, but not only them.

 

This is a pretty new thing.  For a long long time the CRAs did not capture this kind of CC data stretching back over time.  So it was really true that you could carry huge balances (a high risk behavior) and lenders and creditors would never know, as long as you paid off everything the month before.  That will not be true as we continue to move into the future. 

 

Thus, how this particular CC issuer reacted to your balances (positively, with a CLI) is not the only thing you should consider.  Other creditors will be able to see that too.  Mortgage lenders have no reason to view it positively.  (And some CC issuers don't view it psoitively either.)

 

Best wishes and glad things are going well for you....

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Regular Contributor

Re: overlimit matter when CLI?

Thank you for your advice, I will keep it in mind! I am slowly but surely coming away from carrying high balances and intend for it to stay that way. I had not heard it explained this way and I am happy you mentioned it.

Starting Score (Oct '13): 473 (EX), Current Score: MyFICO EX: 713 EQ: 715 TU: 717, Goal Score: 740 & above. Capital One Quicksilver: $2250, Discover IT: $9500, Chase Amazon Store Card: $2600, Care Credit: $15000, Barclays Rewards: $1850 BCE: 20,000, PenFed Visa Sig: 7,000 NFCU cashRewards $24,600
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