I got a letter from Fingerhut today stating they temporarirly increased my CL.
I no longer shop with them, but they helped during rebuilding.
However, it says "to keep this $300 credit increase increase permanent, please make a purchase by May 31st, otherwise it will be revoked".
Does this seem legal? Requiring a purchase for a CLI?
There is no regulation that I’m aware of when it comes to credit limits outside of the requirement that they make sure they have your income and take your ability to repay a loan into account when extending credit.
Outside of that, lenders can increase and decrease or even close at will.
Yep perfectly fine, I get that all the time and just ignore it, as I dont use FH anymore. They actually decreased my limit a few months ago for non usage.
I also ignore these temporary conditional credit limit increase offers from Fingerhut. On occasion, if there is free shipping, I will order a ten pack of socks for $10.99 and they will make $50 of the increase permanent. I have been offered as much as $800 as a temporary conditional increase and promptly ignored it because anything costing $800 on Fingerhut I can probably buy elsewhere for $200 to $300.
Lenders can handle these things any way they want.
A member on here recently posted that after not having used his [$3000 limit] Discover card for ~9 months that Discover sent him a letter saying that they'd be closing his account in ~3 months if it wasn't used, but in the next breath gave him a CLI to $9000 suggesting that perhaps it was his limit that was preventing him from use.
Thanks for sharing! Seems more like an unethical practice but probably legal. I just got a Fingerhut account to start rebuilding. I'll have to keep an eye out if this happens to me. I'm under the impression I need to use 1/3 of the credit balance (spend $100 out of $300 limit) to have a postiive impact on utilization and to establish a good payment history. I cringed at the things I had to purchase on the card. Everything on Fingerhut is so overpriced...I'm just playing the game until I can improve my score.
I'm under the impression I need to use 1/3 of the credit balance (spend $100 out of $300 limit) to have a postiive impact on utilization and to establish a good payment history.
This is completely incorrect above, so please do not believe any of that.
Using $5 of your limit every month or $300 of your limit every month has no bearing at all on your utilization. What matters are your reported balances, that is, what your balance is at the time the statement cuts. Your reported balance will determine what your utilization is and how your FICO score is impacted for the next 30 days until the next reported balance comes through and updates. A reported balance has nothing to do with how much of your credit limit you're using though. Someone can have a high reported balance with little to no use of their card, where someone else can have a low reported balance even if they're using many times the limit of their card if they're willing to make multiple payments throughout the month.
Payment history is cut and dry... either you're on time with your payments or you're not. Establishing good payment history simply means never missing a payment. It doesn't matter on your $300 limit card if you make a single $5 purchase every month and pay it off or if you're making $100 in purchases every month and paying it off. Your credit report will show the same information (on-time payments every month) and your profile/score will be the same 6 months or 6 years from now.