A must read regarding credit cards and decreasing limits

**smcc** · June 28th, 2008, 04:18 PM

This is a must read

http://www.usatoday.com/money/perfi/...terstitialskip

For everyone whose utilization is around 40% think about transferring some of your limit to another card with your financial institution. For those whose utilization is very low, something to think about

**hjm331** · June 28th, 2008, 04:55 PM

Wow, this is not good at all. So we are on their bad side either way. I hope Bank of America doesn't start chopping down my limits since I heavily utilize my cards and pay them off in full at the end of the month.

**RivasGlo** · June 28th, 2008, 07:39 PM

"companies must notify cardholders at least 15 days in advance before making changes in the terms of their account, such as lowering the credit limit."

I wonder if this is something new... Or if some creditors just didnt notify their cardmembers ahead of time...

**Eldarwen** · June 28th, 2008, 07:53 PM

This is not good. Then all the more reason to pay off my credit cards. I am under a total of 15% usage on mine.

**hjm331** · June 29th, 2008, 01:53 AM

Creditors will decrease the limit and then send the customer a letter notifying them that their limit has been reduced. Unfortunately, this is reality and this is how most if not all creditors like to do business.

**Eldarwen** · June 29th, 2008, 07:02 AM

Are they trying to save us from ourselves?

**smcc** · June 29th, 2008, 07:51 AM

They are helping you so you don't go so far into debt that for some reason or another you can't pay your bill off. This is good for some people. But for others such as HJM331 and a lot of us on this site who pay off their accounts every month no matter how much it is, this is going to lower your credit score. Maybe someone here has another suggestion but my mode of thinking is if you have a high limit card and your utilization is low and your paying off your bill every month, you might want to think about opening another card and transferring some of your limit to that card. This mght help you save all the limit that you have worked so hard to accrue and not lose it because the bank now thinks your a possible liability

**shark6** · June 29th, 2008, 08:44 AM

I think that the CC industry are spooked by the mortgage crisis. Also, the trend more and more is that people are using their cards to purchase everyday necessities like gas, food etc. They are also using it to pay their utilities.

They are being proactive in stemming any potential losses. Also, I read this week that Amex said that their delinquencies are up 8%.I don't know what to suggest other than keep your utilization low.

**Rob72830** · June 29th, 2008, 06:17 PM

For everyone out there who has been working to raise their score in order to buy a home and get the lowest interest rate possible, Maybe this is the time to do it before everyone's scores go down. Maybe if all those people with high scores buy houses, it will help the economy and everyone can keep their high scores and high cl's. Just my opinion.

**shark6** · June 29th, 2008, 06:36 PM

Unfortunately, it is not as easy to purchase a home in this environment. One has to qualify for a FHA mortgage which for the first time will be factoring/considering FICO scores.

If one doesn't qualify for a FHA, one has to go conventional which requires 10% down and a much higher score i.e 660 and with some lenders 680 and up.

Also, in some hard hit states, some insurance underwriters aren't writing in insurance and or aren't writing PMI.

**hjm331** · June 29th, 2008, 06:40 PM

smcc, I like the suggestion that you made where a consumer should transfer a portion of their limit from a card with a high limit to another card with a lower limit. The thing is, only BOA allows you to do that. I have not heard any other banks that allow this. Please correct me if I am wrong.

**yoyo11** · June 29th, 2008, 06:50 PM

Originally Posted by shark6

Unfortunately, it is not as easy to purchase a home in this environment. One has to qualify for a FHA mortgage which for the first time will be factoring/considering FICO scores.

If one doesn't qualify for a FHA, one has to go conventional which requires 10% down and a much higher score i.e 660 and with some lenders 680 and up.

Also, in some hard hit states, some insurance underwriters aren't writing in insurance and or aren't writing PMI.

Shark6, i was just looking into a FHA loan, I want to buy a home before my lease expires 4/09. To qualify the site states
-You're a first time homebuyer
-You don't have a lot of money to put down on a house
-You want to keep your monthly payments as low as possible.
-You're worried about qualifying for a loan.
-You don't have perfect credit.

Sounds good to me...do you know of any other qualifications for the FHA home loan?

**Rob72830** · June 29th, 2008, 07:17 PM

Yoyo11, take a look at a Rural Development loan thru the USDA. That is how I got my financing for my house last year and my scores were in the low 600;s (very low). I posted most of my loan info on the mortgage thread if you are interested. One of the things I loved about the RD loan was no money down and no closing costs. Check it out

**yoyo11** · June 29th, 2008, 07:43 PM

Originally Posted by Rob72830

Yoyo11, take a look at a Rural Development loan thru the USDA. That is how I got my financing for my house last year and my scores were in the low 600;s (very low). I posted most of my loan info on the mortgage thread if you are interested. One of the things I loved about the RD loan was no money down and no closing costs. Check it out

thanks..... i'll take a look right now!! LOL

**Eldarwen** · June 29th, 2008, 08:09 PM

Originally Posted by smcc

They are helping you so you don't go so far into debt that for some reason or another you can't pay your bill off. This is good for some people. But for others such as HJM331 and a lot of us on this site who pay off their accounts every month no matter how much it is, this is going to lower your credit score. Maybe someone here has another suggestion but my mode of thinking is if you have a high limit card and your utilization is low and your paying off your bill every month, you might want to think about opening another card and transferring some of your limit to that card. This mght help you save all the limit that you have worked so hard to accrue and not lose it because the bank now thinks your a possible liability

I have 6 credit cards and don't need any more. The most damage that I can do is $13,600. I am working on paying my small balances off first. I really need to work on my Discover card because that is almost at 50% and that is not good. I'm not looking to buy a house any time soon.