SEVERE credit limit drop RUINING my credit and life. I did nothing wrong! Help!!

[sakura]

I have an exceptional payment history and no bad remarks on my credit reports which I've worked hard to maintain despite multiple layoffs, death in family, illness, etc. And I'm old and alone. I had a 20K card with a company and I used 5700K for an emergency because I didn't want to dip into savings. I do have 30K in debt which I was finally paying down after another layoff. Yes, having debt is not good. Then abruptly the 20K card dropped my limit to UNDER what I owed. And reported to TransUnion that I went over my limit which clearly I did not. I called the 20K card company all week, mostly getting nothing we can do, we lowered it because your debt went up, which it did because I used the FREAKING card they gave me. I offered to pay the balance and full if they would restore the limit or even part but they didn't care. More concerned about destroying my life then getting paid.

You need a good score for EVERYTHING. Lately even jobs are asking to check this before they hire. And did I mention I'm old and still trying to ever own a home and don't have time for this?

This tanked my credit score 56 points to 590 on Transunion!!! AND another card notified me that they were dropping my limit from 2K to 1k citing that they had seen the TransUnion score drop. So now that card looks maxed. I didn't know this was possible. I discovered it's called balancing chasing and it will only get worse and worse if others see your score if you don't fix it. Because even if you pay your debt they can keep lowering the limit which then makes debt to credit bad and transunion etc. keep lowering your score.

I finally got a Transunion rep who said I could snail mail proof they lowered the limit and I didn't use more or max the card. But god knows how long that will take IF they will raise it. I was finally told by another rep at the 20K card place I could call their lending department and they might budge/help. But I'm terrified. I'm running out of time before any other card notices. Please help! I did all the right things in a bad economy. 

[SouthJamaica]

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@sakura wrote:

I have an exceptional payment history and no bad remarks on my credit reports which I've worked hard to maintain despite multiple layoffs, death in family, illness, etc. And I'm old and alone. I had a 20K card with a company and I used 5700K for an emergency because I didn't want to dip into savings. I do have 30K in debt which I was finally paying down after another layoff. Yes, having debt is not good. Then abruptly the 20K card dropped my limit to UNDER what I owed. And reported to TransUnion that I went over my limit which clearly I did not. I called the 20K card company all week, mostly getting nothing we can do, we lowered it because your debt went up, which it did because I used the FREAKING card they gave me. I offered to pay the balance and full if they would restore the limit or even part but they didn't care. More concerned about destroying my life then getting paid.

You need a good score for EVERYTHING. Lately even jobs are asking to check this before they hire. And did I mention I'm old and still trying to ever own a home and don't have time for this?

This tanked my credit score 56 points to 590 on Transunion!!! AND another card notified me that they were dropping my limit from 2K to 1k citing that they had seen the TransUnion score drop. So now that card looks maxed. I didn't know this was possible. I discovered it's called balancing chasing and it will only get worse and worse if others see your score if you don't fix it. Because even if you pay your debt they can keep lowering the limit which then makes debt to credit bad and transunion etc. keep lowering your score.

I finally got a Transunion rep who said I could snail mail proof they lowered the limit and I didn't use more or max the card. But god knows how long that will take IF they will raise it. I was finally told by another rep at the 20K card place I could call their lending department and they might budge/help. But I'm terrified. I'm running out of time before any other card notices. Please help! I did all the right things in a bad economy. 

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It's time to dip into your savings and pay it off.

[FicoMike0]

Ditto @SouthJamaica 

Once they start chasing, pif is the best approach.

[IsambardPrince]

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@FicoMike0 wrote:

Ditto @SouthJamaica 

Once they start chasing, pif is the best approach.

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It's better to PIF every month and not act like you have savings, which you don't, while you're paying interest that is money you would actually have if you'd ripped the band-aid off. 

If I go "I think I'll put this $10,000 on a credit card because I want $10,000 in savings." I don't have that $10,000 in savings, what I have is $10,000 in debt at 23.49% interest. Which means that if I make the minimum payment just so that they won't sue me, then it'll take about five years and $16,542 to the bank to satisfy the $10,000 that I borrowed. And that assumes that over 5 years, nothing else comes up and goes on the card. Credit cards deplete savings, they are not savings. To make things even worse, I miss out on the interest the bank would have owed me, had I actually saved the $6,542 in interest. Better to just use your savings and get it over with than miss out on $6,542 interest and $1400 in missed bank interest. Almost $8,000 down the rat hole back to the bank in that 4 year 8 month period could have paid my entire monthly rent for over 6 months.

They tend to want you near your limit and barely paying it off. Before the 90s, they typically wanted at least interest plus 5% of the outstanding amount, then they found that they can take more money from most people by doing interest +1%, which makes a big problem look like it's not.

Don't go on a spending spree and let the good times roll and you'll be better prepared for emergencies and unexpected bills later.

This involves a large amount of telling yourself no, finding alternatives to spending money, spending less money instead of going for a splurge.

If you ever pay interest to a credit card bank, you're losing with money for sure.

Many people are maxing their cards out trying to buy food and gasoline, and so they can shift their actual income to satisfying the bloodsucking landlord, or mortgage bank, but this essentially just changes who sues you when it falls over, and with cards, most of it is interest, which is money you didn't even get to spend.

Having been on the bad side of the banks years back, and having survived it through the Nuclear Option (bankruptcy), I can honestly say that you need to worry a lot more about your bank account balances than a FICO score, and you need to worry more about your debt than your FICO score.

I would focus on bank balances and getting this debt eliminated, not worrying about what a debt score says. 

I still have yet to apply for anything other than credit cards and a car loan (the car went into the bankruptcy and good riddance) which cares what my FICO score is.  And if you have money and use that money for things instead of putting it on a credit card and going "Oh that didn't hurt. More, please!", then you see what things are costing you and you aren't as prone to debt.

At 11.1% and climbing that are 90+ days delinquent, ask yourself why credit card banks don't seem to care and keep mailing them out to anyone who asks. It's because at 23-36% APR and with fees, it's hard to lose enough money for the bank to not win overall.

[Kforce]

Agree with @FicoMike0 and @SouthJamaica .

Time to use the savings   

[NoMoreDebt]

A credit card isnt a loan and shouldn't be used or viewed as such IMO. Using it then at statement cut paying in full for the cash back or points is one thing but using a credit card to hold and carry your emergency when you actually have the cash just because you don't want to touch it is a loosing strategy from the start.

[Windchill92]

Like others have mentioned, pay down the debt with your savings...forget about FICO for now, it'll increase correspondingly.

The interest on your debt is increasing several times faster than the interest you gain on savings. Nuke the debt; this is a simple math problem.

Besides, welcome to the FicoForums.

[Thomas_Thumb]

Focus on paydown. Get er done!

[Realist]

As you've just experienced, CC companies can completely eliminate your line, or reduce it at a moments notice to protect their exposure.  I learned this a long time back, which is why I buffered myself from it likely ever happening again.  If I had to guess, your utilization was the culprit among only a few lines of credit.  Make no mistake, we are entering an economy where lending requirements will become more strict, and extended credit lines will become scrutinized.  You will want to cycle unused credit lines in a timely manner, to avoid account closure.  

To find a temporary relief with your situation, I would recommend to pay off the over the limit difference.

To find remedy out of your situation, ideally you would want to pay off the amount in full, or transfer some of the balance onto other cards that you can manage.  If this payment was front loaded onto one card, it elevates that card into a questionable status.  This compounds depending upon available credit among all of your cards.  Utilization scores should never exceed 30% on each card, and certainly not above overall credit available to you.  Often times one card doesn't matter, so long as you have a very large of available credit.   

Credit scores bounce back.  The quicker you can remedy the issue, the less impact it will have on your overall score.  

[Gregory1776]

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@Realist wrote:

As you've just experienced, CC companies can completely eliminate your line, or reduce it at a moments notice to protect their exposure.  I learned this a long time back, which is why I buffered myself from it likely ever happening again.  If I had to guess, your utilization was the culprit among only a few lines of credit.  Make no mistake, we are entering an economy where lending requirements will become more strict, and extended credit lines will become scrutinized.  You will want to cycle unused credit lines in a timely manner, to avoid account closure.  

To find a temporary relief with your situation, I would recommend to pay off the over the limit difference.

To find remedy out of your situation, ideally you would want to pay off the amount in full, or transfer some of the balance onto other cards that you can manage.  If this payment was front loaded onto one card, it elevates that card into a questionable status.  This compounds depending upon available credit among all of your cards.  Utilization scores should never exceed 30% on each card, and certainly not above overall credit available to you.  Often times one card doesn't matter, so long as you have a very large of available credit.   

Credit scores bounce back.  The quicker you can remedy the issue, the less impact it will have on your overall score.  

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Yes and no offense, a 650 Credit score is going to be scrutinized much more than someone with a 750 credit score with the same credit lines and random purchases. something about your profile flagged you for them.