Over the limit impact? Short or Long term? Cannot find a straight answer.

[marty56]

Maxing out a card opens you up to AA on any and all of your other CCs which could have a major impact on your score if you have balances on other cards.

[DollyLama]

Discover is true FICO 8 score from Transunion

Capital One is VantageScore 3.0 from Transunion<-----not what most lenders use, but can be a good tool to see what direction you're going, up or down. 

[Thomas_Thumb]

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@danny4l wrote:

Hi guys,

I'll explain this as simple as I can.  Can you please explain it as simple as you can?

Went over my credit limit by $5.  I didn't think it was that big of a deal.  I open up my credit monitoring the other day and it says their is "1 potentially negative item on my credit report."  Logged in and it says the card issuer is reporting the account as negative.

Does this impact your score for as long as you are over the limit or is this one of those 7 year things?    As of today, I have no answer how this is going to affect my score in the short term or long term and I'd kinda like to know.

Any insights into this?

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The impact on score is point in time. As soon as utilization is reduced score will bounce back. However, all your points won't return just by reducing balance to slightly under the card's CL. My belief is once the max out UT% threshold is crossed, score penalty plateaus - in other words 92% might be just as bad score wise as 101%. Maxing out one card (utilization 89% or higher) can drop score 20 to 60 points by itself depending on age of account, # cards in your file and age of your file. 

Please note, aggregate utilization (all cards combined) is an independent scoring factor from highest utilization on a card. Aggregate utilization is weighed more heavily as a scoring factor but both are important.

Key point, as mentioned up thread, is not to maintain high utilization levels month over month as that can lead to adverse action (AA) in the form of credit line decreases (CLDs). To avoid significant risk of a CLD or CLDs, pay down the card's balance to under 69% utilization. Then make monthly payments 3x the minimum in subsequent months.

Side note: A history of credit limits by card is listed on CRA reports. So, CLDs would be viewable by current/future creditors. The CL history is at least 3 years.

[HeavenOhio]

TT, I pulled my reports from annualcreditreport.com early last February. On EX and EQ, my CL history goes back 24 months. On TU, it goes back 30 months.

One thing that isn't noted is why a CLD may have occured. It's not uncommon for customers to decide to shift a limit from one card to another, for instance.

[Thomas_Thumb]

Thanks.

I checked my reports more closely: TU shows 30 months of CL/HB and EX shows 24 months in a summary section. My EQ reports itemizes CL/HB by month and includes 2 years worth of data.

P.S. Although reason for CLD is not stated, a creditor can see high balance (HB) along side CL. So if CLD happened shortly after a spike in HB one might suspect a credit management issue was the reason.