Reduce Line Of Credit

Yes, its never happened to me so far, but I've heard they've been doing that a lot with the way the economy is right now.

2008-11-15 17:49:13 by Ron R

Phil Strong answers the query "Paying off the mortgage vs Line Of Credit?" Get more details at: philstrong.com

Hi ALL,
I wanted to ask 2 questions on (non-secured) Line of Credits.
Hope that's OK and someone here has the knowledge or experience to answer:
1. Line of Credit use and FICO score: my understanding is if I use 75% or less of the line of credit limit it does NOT affect my credit score(?) what if I use say 80%, how does it work - my new score is adjusted like within a few weeks. Also, if say after 2 months again I am below 75%, does it bring my score back to the previous value within a few weeks? Also, approximately by how much does it affect your score (I understand this will just be an estimate). say I have 720 now $25,000 LOC and use 80% - does it reduce the score by around 10 point to 710 or like 50 points to 670?
2. Line of Credit Limit Reduction: is there anything I can do to prevent the bank from asking me to pay back a LOC/reduce my line of credit limit? For example, which of the 2 will reduce the chance of the bank reducing my LOC LIMIT:
- Not using the account at all or
- Moving 75% to another account or actually using the amount for investment purposes so the bank can not "touch" that amount/money.
What confuses me is that on one hand when I am not using the account at all, the bank sees a good credit handling/score and should not worry about me paying back. on the other hand this makes it very easy for the bank, technically, to just reduce the amount (in theory without even telling me) because the amount is already "there", meaning account not used(?)
THANKS.
Regards, Neil

You're going to hate my answer.
But the best way is not go carry a balance.
Suze Ormond said the best thing is not to allow your monthly balance to go above 20% of your credit limit and pay in full monthly.

2008-10-02 11:55:48 by Independent_guy

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My credit score is 702 and I pay off my credit cards every month. I called VISA to see if I can get an increase in my credit limit and they denied me. They said the reason for the decline was ACCOUNT ULTILIZATION. Does anyone know what that means.

Actually, that usually means you are using too much of your credit line.

Paying it off each month does not reduce your chance to get a credit line increase.... it's very good to do that.

2007-08-19 19:04:58 by Moe C

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I have spent 10 years building a VERY large line of credit on my credit card. It began with MBNA, then became Bank of America a few years ago. I inquired today about promotional rates available for my account, ultimately it lead to B of A wanting to reduce my credit line since they felt (on the surface) it was too large. I have perfect credit and have spent 10 years building this credit line (and currently carry NO balance). I simply inquired about the int rates available, which was followed that same day by phone calls telling me they think my EXISTING limit is too high, and that I need to jump through hoops to keep it, even though my track record and performance on this account is PERFECT. I explained to them that they do not have me over a barrel, and that they are practicing bad business. Can they really lower my credit line, which I have earned over the last 10 years, without anything other than "they think it is too large"?
It feels like it is something I have earned over all that time, and my perfect performance with it is more than enough.

It's not only B of A doing that. I got that from AMEX, too. I think
lending institutions don't want people to indulge in debts in this hard economic time. The financial future is still uncertain. In other words, they are trying to control your borrowing which like the the other person who replied to you said should be taken positively, instead of negatively. I have very good credit, too and Amex reduced my credit limit from 10K to 2.5K. I liked it..
If you really need a credit card and you have good credit. apply in another bank.

2009-04-14 18:44:01 by Someguy

I've been a member of my bank for over 20 years. I missed one payment because of a snowstorm that hit my city and took out our power and the roads. When I paid my bill and called my bank to confirm and speed up the transaction process, they started to ask me invasive and possibly unnecessary questions, such as my social security number and income, which I did not see relevant to the situation.

Then, after telling them my income, the person on the other line said he reduced our credit line by $15,000. We told them that we had only missed one other payment in 20 years, and our income was steadily increasing. But the fool on the other line remained adamant, along with asinine and sophomoric. He retained a smug and condescending attitude. I was offended and repulsed.

However, is that legal? To just do that at one's discretion? How can I change the situation? Any advice is appreciated, thanks in advance.

Yes, they can do that. Extending credit is a business decision, not a right.

There are two sides to the credit equation, how much the lender thinks is safe to lend a person and how much the lender has to give out. Banks are keeping more cash on hand these days which means less to lend out. That means lower credit limits for everyone and no credit for those with lower credit scores.

The teller should not have been rude or smug, that should be reported to the bank management. However, I wouldn't take the lower limit personally, it's a sign of the times. As a matter of fact, you should be happy that they left you with that high of a limit. Many people don't get even that much!

2009-03-30 17:52:34 by aeroprodrivemaster