high balance question

Discussion in 'Credit Talk' started by tom65432, Oct 20, 2001.

  1. tom65432

    tom65432 Well-Known Member

    I have a credit card with FirstUSA that had a credit limit of $8500. A collection agency put a negative on my reports that FirstUSA picked up on. As a result, they dropped my credit limit to $3100, the amount that was outstanding at that time.

    The card now shows up on my reports as a high balance of $8500, with a credit limit of $3100. To me, that at least implies that I was once $5400 over my credit limit. Am I right in this assumption? Is there anything I should do about it? Technically it is correct. I once had a credit limit of $8500 on the card.
  2. leo728

    leo728 Well-Known Member

    fusa can do that? I mean drop your credit limit?

    And it should hurt your credit score. Why don't you try disputing it as inaccurate? I know it's a long shot but it's worth a try
  3. rubyjean

    rubyjean Well-Known Member

    The reason that your credit Line was reduced was because of what was on your credit report in regards to your Debt outside of First USA.. They have every right to do so.. When A bank sees that there is a chance that you may become a risk in regards to Not getting paid, ect.. They will reduce your Available credit.. The 8500.00 just states the highest amount of your credit line that was used since the account was open.. Most of the time, Credit Card Companys will try to contact you to try to find out what is going on, ect.. If they can not get ahold of you, they will just straight reduce your credit line.. They are required to send you a letter..
  4. MikeB

    MikeB Banned

    Personally, I would balance transfer the balance to a more respectable company, and then call retention to reduce your APR back or lose you as a customer.
    Planetfeedback would be my next step.
    The "guilty until proven innocent" premise is just another way for these companies to get more money from you. Could you imagine your mortgage lender raising your APR on your mortgage because you were late on some payments to a creditor? If someone is having some temporary financial difficulty, how could raising someone's APR possibly help the situation. Wouldn't that be worse and cause some to lose hope and declare bankruptcy? These companies should focus more on serving their customer's needs rather than lining their pockets.
    I'm done :)
  5. tom65432

    tom65432 Well-Known Member

    I did complain. They said it was beyond their control. They would not help me.

    I cannot balance transfer because I am maxxed out on my cards. Two major surgeries, $150,000 in doctor bills, not all of it reimbursed. Plus three years out of work becasue of injuries. Had a couple bad years but things are looking up. I have not charged anything for 6 months, am gradually paying down my $63,000 in credit card debt.
  6. roni

    roni Well-Known Member

    I've been thinking about this since you posted it....

    A couple of things come to mind, both bad.... I'm sure that somewhere in a FICO score that it would look at that info and it would be bad... to make matters worse, I think if a human ever looks at it they will realize quickly FUSA majorly dropped your limit.

    Solution? I would think you need to work the original problem and get it off your file. With that reporting, I would contact FUSA (who does this sorta thing all the time) and ask to speak with a manager. I can not stress this enough... a manager, never accept the word of the grunt answering the telephone. Then explain that there was an error in your credit report that has since been corrected, but that FUSA needs to correct the reduction because it is causing you serious problems unfairly. See what happens....

    BTW, my mother has a FUSA account which she has never been late on ever.... She's had the account for more than three years... Last month, she made a payment for the balance of the account. They made the credit and CLOSED THE ACCOUNT! When she called to ask why, she was told "account performance" but no one could answer what that meant! Now the account shows closed by credit grantor and she was never late!
  7. tom65432

    tom65432 Well-Known Member

    I have another FUSA card with a $13,000 limit, open 13 years, never a late payment. Yet they did this to me. I will take your advice and call them. I think (not sure yet) that I got the paid collection deleted from my credit reports. If so, it should help my case.

  8. MikeB

    MikeB Banned

    I am glad that FUSA turned me down several months ago....thanks for the info.
  9. rubyjean

    rubyjean Well-Known Member

    You can get the answer to why your credit line was reduced by just reading the First Sentence and also the last sentence in which you say that you have 63000.00 in revolving debt.. That is why you are a risk to First USA, You are a risk to charge off on even BKO.. they want to minimize their loss..
  10. parallax1

    parallax1 Well-Known Member

    That's not the reason. The real reason is that they smell blood and see the opportunity to capitalize off of it. If they were worried about him defaulting on the balance, they would lower his APR so that his payments would go more toward the balance that he already owes. They always go the other way which is raise APR's and lower limits causing late fees, over-the-limit fees and panic. THAT'S when people start to consider BK. If you don't realize that, then look out if you are ever in that situation.
  11. MikeB

    MikeB Banned

  12. amaineman

    amaineman Well-Known Member

    account performance

    When she called to ask why, she was told "account performance" but no one could answer what that meant.

    Some companies are now closing out accounts that have not generated profits. These belong to people who carry small balances, pay on time and usually have no annual fee.

    The end result is the company earned far less than projected. The account performance from a profit perspective was poor.

    Not a very nice trend. We should reward good behavior not punish it.
  13. rubyjean

    rubyjean Well-Known Member

    It is the one and only reason his Credit line was reduced.. You are right in that this Customer needs assistance.. One thing that with the amount of revolving debt, he does not need 5000.00 more of available credit.. This Customer has a couple of ways of getting rid of this debt.. First due to the high amount of Hospital bills, along with the Credit Card debt, they should go with a CCCS, then they could pay only one payment a month.. With Lower interest and also get the fees stopped.. If that does not work, next step would be to work with each Company individually and work out reduced payment programs. You have to remember that credit card debt is unsecured debt, and there are a lot of people who just use the credit cards to pay off secured loans, ect.. and then let them charge off..
    I am in this situation every day, I am presently working on a task force in the Customer assistance department in the charge off unit and I see it every day.
  14. mj

    mj Well-Known Member

    I'm with rubyjean. I don't mean to sound heartless - god knows it sounds like you've gone through hard times and are trying to work through it.

    Problem is that when it rains, it pours. Your high debt level (and being "maxed out" with I assume a high balance to limit ratio) is a huge red light. That red light usually triggers existing accounts to reduce limits and increase APRs (now you're a higher risk). That means less of your payments goes to principal, and you start falling deeper in debt.

    Creditors have a FIDUCIARY responsibility to their SHAREHOLDERS to MAXIMIZE PROFIT-- NOT TO SAVE CUSTOMERS MONEY. It's business, clear and simple.

    Someone asked why won't a mortgage holder jack up your rates when you're in trouble? Simple - the note (or contract, the mortgage document) states that they can't - it's a fixed rate loan. Look over your credit card agreements carefully - ALL terms are subject to change. You give them that right when you accept or use the card.

    Back to the original problem -- I have to ask, are you "solvent"? That is, with this much debt and so much time off of work, are you able to reduce your debt, or are you just making minimum payments and not seeing the principal balance going down?

    IF you are able to get out of debt within a reasonable time, or if your cash flow is not great (i.e. paying Visa with Mastercard, etc), then it would be a good idea to get some help.

    A good consumer credit counseling service should be able to reduce or freeze the interest being added, in return for the creditor having a better chance of getting paid. You may want to look into it.

    Good luck (I mean that, truly)--
  15. tom65432

    tom65432 Well-Known Member

    Actutally I am now solvent. I can pay my bills now and am gradually working my way out of this. My goal is to be debt free (credit card debt) in 10 months. Mist previoously gave me an idea to get my interest rates lowered and I am working on it. Citi just lowered my interest rate.

    My low point was about 6 months ago. I had $11 on a Friday and $3,000 in bills due that following Monday. Things turned around that weekend and have been improving since then.

    My original question had to do with the reporting to the CRA's. I am concerned that it at least looks like I went way over my limit. I wondered if this is something to be concerned about?
  16. keltexx

    keltexx Well-Known Member

    I dont recommend CCCS-the problem is, they are not up front about which creditors will report your account as late even though you continue to make payments, and once you send them payments, you have no control over when, or if, they disperse payments-by this I mean that if they pay your creditors late, what recourse do you have? I tried CCCS for one year...three accounts consistently late, one account not paid AT ALL-I had to quit the program to get this resolved...and one more CCCS thing-many are non-profit, and are in fact supported by the creditors.

    I am not saying that each and every one is bad, but I did better w/negotiating w/ creditors by myself than the service (or lack thereof) provided by the CCCS recommended to me by one of my creditors. But these are issues to consider. Good luck.
  17. mj

    mj Well-Known Member


    SOunds like you're on your feet- congrats.

    I wouldn't worry too much about the appearance of being (or having been) over your limit. THat doesn't seem to have much of an affect on your score (maybe you asked them to lower your credit limit?)

    If you're close to max-ed out on cards, your balance to limit ratio will kill your score more (add up all balances, divide by all limits, and if the # is >75%, red light/ 50% yellow light, 30% or under, you're good to go).

    Get the balances down, raise the score, then get the limits restored. Most card issuers will be glad to since you've paid according to terms - becoming rarer and rarer!

    Congrats and good luck-
  18. DaveH

    DaveH Well-Known Member

    Greetings all,

    I'm a brand new member with a similar question, so I thought I'd bump this.

    I gather that mj and rubyjean are professionals? mj offered the first concrete guidelines (75/50/30) of debt to credit limit ratios I'd seen. Very helpful. Are these pretty much industry standards?

    I have 7 main CC lines open at the moment, and my wife and father have a few smaller lines on which I'm an authorized/joint user. $75K in total credit limits on these, an Amex is high with $20, a first USA low with 7.5K. I use them as a cash management tool (i.e., I don't ever carry balances over a billing cycle.) 2 of these lines are virtually inactive at the moment. A couple of questions:

    -is the overall or individual card/limit ratio more important? e.g., I now have probably $18K charged on this cycle (somewhat more than usual--getting big reimbursements at month's end.) However, the bulk of that is on 3 lines, which are pushing 50% of their limits. Is this important? Should it expect it to have a meaningful effect on my credit score?

    -I take it I would be better off NOT closing the inactive lines, as they help my debt/limit ratio? I had previously leaned towards doing so, as perhaps 7 major/several minor would seem like too many to the CBs...

    -Does a request for a credit limit increase count as a new inquiry (and thus against your score?) My #1 reason for my EQFX score of 715 was "too many inquires." Oddly, for TU's 786 it was "Too many active accounts with a balance," and inquiries wasn't even a top 4 item.

    TIA for any guidence.

  19. DaveH

    DaveH Well-Known Member

    A little bump for the pros and many knowledgable amatuers out there. Hope I didn't overindulge wiht the questions, and that you all had a nice weekend. :)
  20. GEORGE

    GEORGE Well-Known Member

    18,000/75,000=24% is no problem...even if you DON'T pay in full...

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