Unused Credit and possible denial of loan(s)

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Replied by KMoney on topic Re: Unused Credit and possible denial of loan(s)

I like so many other people thought that once you are in the rebuilding phase and you learn the rule of thumb]

On the other hand I agree why do I need high CL for what so you can spend more, and then find yourself right back in the same situation that you prayed to God would never happen again.
11 years 1 week ago #1

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Replied by Meya on topic Re: Unused Credit and possible denial of loan(s)

No problem, you are absolutely correct!
11 years 3 weeks ago #2

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Replied by smcc on topic Re: Unused Credit and possible denial of loan(s)

Thanks Meya for bringing it up to date. Since I started this thread my thought pattern is no matter what your limit, if your utilization is very low, i.e 0 - 5%, the powers that be will not reduce your limit. You pose no threat based on your payment history for them to warrant reducing your limit.
11 years 3 weeks ago #3

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Replied by Meya on topic Re: Unused Credit and possible denial of loan(s)

I just thought was an interesting thread to bring back up to date.
11 years 4 weeks ago #4

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Replied by Meya on topic Re: Unused Credit and possible denial of loan(s)

I understand you 100% smcc, and I do think it is wrong for other creditors to judge us by another creditors limit. But at the same time, we are talking consumer vs banks + high risk departments = Banks win. I am pretty sure that this is a criteria or factor that they look for when they are issuing creidt to consumers. I have heard this done beofre

As hard as you are working to keep balances low, you would think that they should be in your favor since the number one issue is too keep balances under a certain percentage. I have noticed that banks have decreased limits due to you not using what you have too offer. They figure that you can not handle a high balance so that is why they decrease it. Let's not forget that they will also lower it if they see you are pretty high on other balances with other creditors.

I remember when I asked JcPenny's for another increase since I did not received one since Dec 08, and they were like but you already have $1300 available credit (of $1500 cl). Chevron, and the Avenue said the same thing. They all said the "Periodic Review" bull-crap but that is the way it goes.

As far as the risk goes, I have not encountered this situation because my limits are not that high on any of my cards and I am just like you, I don't need all that available money. This is how I got caught up in the first place. Hopefully someone will come in soon and express their situation about your question. But this is something to look out for when purchasing a house because I find one thing weird about it, my auntie purchased her house about 3 years ago and the bank wanted her to pay all her debt off and she has excellent credit. I mean what do they expect when you pay debt off? You are going to end up with too much available credit! Duuhhh, give me a break.
11 years 2 months ago #5

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Replied by smcc on topic Re: Unused Credit and possible denial of loan(s)

You know guys I would think that if I had whatever amount of available credit, its how I manage it that would be the deciding factor. If my available credit is growing over the years but I effecitvely manage it so I'm never late on payments, I utilize only a small portion of it at all times, and when I do have to make a large purchase, the lender sees that I pay it off as soon as possible, that my management would be the positive factor when increasing my limit. Meya your right, I will never use the available credit that I have and like most I looked at CLI's as a mechanism to increase my credit score but to be possibly be denied because I have so much available credit doesn't seem right. I know the lender worries that I can all of sudden just max everything out. but it this scenario comes up should I not be judged on how I handles this situation vs denying me because of past statistics of others who have faced this same situation?

Do you now go to you lender and say, "you know what, I have too much available credit can you reduce my limit?" Seems like all those years of on time payments, payments more than the minimum, not going over 50% utilization of your maximum, being patient and diligent as HJM331 always talks about comes to bite you in the end.
11 years 2 months ago #6

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Replied by hjm331 on topic Re: Unused Credit and possible denial of loan(s)

They are good for buying a car without waiting on a loan. lol

But then again, your interest rate would be too high if it's higher than 10%.
11 years 2 months ago #7

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Replied by Meya on topic Re: Unused Credit and possible denial of loan(s)

Citibank is doing the same thing, cld! :shocked: I really do not see the need for a 40 an 50k cl. If you need that type of money, I think you should either own a business or go to the bank for a personal loan. I do not need limits that high niether, I mean come on, are you really going to use that much money?:confused:
11 years 2 months ago #8

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Replied by hjm331 on topic Re: Unused Credit and possible denial of loan(s)

Too much available credit is leading to CLD's. That's why AMEX is the lender for the most CLD's. But they were also know to be the creditor who gives the highest limits. With the way the economy is right now, there's no surprise that AMEX is doing this. They're worried about consumers purchasing big ticket items on their cards and not being able to pay the debt back.
11 years 2 months ago #9

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Replied by Rockin35 on topic Re: Unused Credit and possible denial of loan(s)

This is good information SMCC.. I've always thought, surely keeping those cards on my credit file and getting those increases EVEN when I didnt need them would help ZOOM my score a lot faster. I learn something knew every day!!:confused:..guess I should stop it then..huh?!~ Rockin35
11 years 2 months ago #10

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Replied by Meya on topic Re: Unused Credit and possible denial of loan(s)

This is true, it is the income to debt ratio that creditors use. Another thing that will cause a denial is when indiviudals apply for credit and say that their income is ummmmm $65k annually, but they have credit cards with limits (regardless of the balance) that amount to over $70k, that is a red-flag for creditors also.

This topic was started in another thread that I just cant seem to find right now.But when I do find it, this posting will stay but will be moved in the correct thread. This is a real nice poting smcc, thanks!
11 years 2 months ago #11

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was created by smcc

Doing research and found out that if you have a high credit card limit and lets say your utilization of your card on a monthly basis is very low and you pay off your balance every billing cycle that you can possibly be turned down for a loan for a high ticket item, i.e. auto, home, because you have so much unused credit and the possibility of going into debt or maxing out your card can make possible lenders nervous.

The rule of thumb by most financial institutions is not to give out more credit than 20% of your gross income. You can have 5 cards with $20k limits on all of them, use just one of them on a regular basis and be turned down for an auto loan because you have $100k of availale credit, use it wisely but have so much unused credit that you now are considered a possible risk?

I guess applying for continual Credit Line Increases does have its drawbacks
11 years 2 months ago #12

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