Lender recommends I get my credit limit lowered

[Anonymous]

I was just thinking, hypothetically of course, what if the OP called Discover and spoke to someone above the CS level and stated that he wanted to self-initiate a CLD to $10k (or $5k, whatever) and gave them a reason like he was planning on leaving the country for a month and wanted to force self-restraint in terms of spending, so the lower limit would help achieve that... but in a month or two he'd like to know that if he calls back he could have the limit restored to $20k.  Something to that tune.

A couple of years back when I started doing random FICO score testing I really wanted a $500 CL card just to make utilization thresholds easily reported and able to be crossed since all of my CLs were in the 5-figure+ range.  I was considering doing something similar to what I proposed above, but ultimately didn't do it because I didn't want to take a (say) $10k limit down to $500 if I didn't know for sure I could acquire that $10k back when I wanted to. 

[Anonymous]

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@Anonymous wrote:
And here’s another thing. I understand where the Lenders coming from because they feel that you are a risk because you could go use up all that credit and then be way beyond your means and be unable to pay them back as well. But what if they were to approve this loan and after that you go and get CLI’s? Do they at some point want to accelerate your loan because they feel like you went and got too many CLI‘s?

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I just think it's a bunch of BS honestly, so I hope the OP comes back and tells us who this lender is and/or what product he's considering applying for.  I think about the members of this forum that have $200k, $300k, $500k+ in unused credit lines that have top-tier credit profiles/scores that could get approved for any product out there.  I don't recall hearing about others posting saying that they were denied for having too much unused credit, so I'm thinking this issue is lender-specific and that perhaps telling this particular lender to take a hike could be the best course of action.

If Cornelius has $300k in overall limits with $5k in balances across those limits, that to me speaks volumes about his ability to manage those limits and show restraint compared to Rupert that has $5k in balances across $10k in limits, just as an example.

[Anonymous]

Very interesting and creative I would love to hear how something like that would pan out where you try to initiate a CLD for a temporary period like that.

[Anonymous]

Unless the rate and terms were the super duper ie  2% apr 50 year loan with no closing costs I would look for a new lender.

Speaking as the co-owner and husband of the broker of a midsized Real Estate Firm 1) The model with low credit limts is a very old model I have not seen used  in 20 years or longer  2)  Alot of the lender with work with use auto driven score reviews ;If you have what the computer considers a) high enough score b) low enough dti c) long enough length of employment  as long as its appraisals out  you are done with very little manual review

   The worst  deal  i recall FICO score 750 range ,  credit cards usuage under 1% utilization,  income over $300,000, house being purchased $400,000,    over $250,000 in savings,  length of time at employer 20 plus years, 20% down .  The first lender thought the buyer had to little credit and did not want to give  them a decent rate so buyer went to another lender who grabbed the deal and gave them their best rate. 

[Anonymous]

I really wish I could quote on mobile. It makes it sometimes look like the thread doesn’t properly follow because I can’t. My last comment was referring to your hypothetical, BBS.

I have heard of people being denied for having too much unused credit. That is the one known con/danger of continuing to increase your credit lines. I mean isn’t that what happens when they deny you a CLI? Basically they feel you have enough credit at this time and they don’t want to extend it any further.

[Anonymous]

Yeah for sure, that happens often with revolvers no doubt, whether internally with one lender or across aggregate limits.  I'm not sure I've heard of someone being denied on a loan though due to unused revolving balances.  That's a little different in my book.

[Anonymous]

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@Anonymous wrote:

Yeah for sure, that happens often with revolvers no doubt, whether internally with one lender or across aggregate limits.  I'm not sure I've heard of someone being denied on a loan though due to unused revolving balances.  That's a little different in my book.

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In some of the models they assumed you maxed out all your cards then refigured your ratios.  I think its insane,  

[Anonymous]

Exactly they used to do it more often it’s definitely not as common now.

[Anonymous]

I know in the past some CU's wouldn't grant new or increased exposure when doing their DTI math when looking at someone with a thick profile and ample unused credit.  Like the RE example above... when in doubt shop around when it's a big purchase.  I did this on my first mortgage back in 2011 and score a 10 year 3.25% w/ PMI under 50% of other places I got quotes from.  When you don't have the 20%  DP it makes a difference on the PMI when the quotes ranged from 55/mo to over 130/mo for the same exact product.

[Revelate]

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@Anonymous wrote:

Unless the rate and terms were the super duper ie  2% apr 50 year loan with no closing costs I would look for a new lender.

Speaking as the co-owner and husband of the broker of a midsized Real Estate Firm 1) The model with low credit limts is a very old model I have not seen used  in 20 years or longer  2)  Alot of the lender with work with use auto driven score reviews ;If you have what the computer considers a) high enough score b) low enough dti c) long enough length of employment  as long as its appraisals out  you are done with very little manual review

   The worst  deal  i recall FICO score 750 range ,  credit cards usuage under 1% utilization,  income over $300,000, house being purchased $400,000,    over $250,000 in savings,  length of time at employer 20 plus years, 20% down .  The first lender thought the buyer had to little credit and did not want to give  them a decent rate so buyer went to another lender who grabbed the deal and gave them their best rate. 

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This was recently?  When all the money is made in origination?

That profile would easily fly with Fannie / Freddie / FHA... I know humans can be awfully stupid sometimes but this is just dumb certainly in the market post mortgage crisis.  Here someone else take my paycheck, please. 

Um no.

+1 to everyone saying find a new lender.