I'm pulling out of years of credit mess. I have a business VISA card with a $4000 line of credit from Chase, which is also my bank. (It used to be WaMu, but Chase took that over 3 years ago. The card has been maxed, or close to it, since before the Chase takeover.) I've been making payments of barely more than interest all that time, and not using the card. On Dec 4th I paid off the balance of a little more than $3400. Today I tried to use the card for a $100 purchase, and it was declined. When I called the bank, they said they had done a "random" credit review on the 7th, and reduced my credit limit to $300. (The monthly interest on the previous balance accounts for why I can't charge $100 when the cl is $300.) An influx of cash, it seems, can really freeze your credit. My debit card was also frozen, because I used it to pay a bunch of bills, and that looked like "unusual activity" to the bank. The fraud department was automatically notified. In regards to the reduced credit limit, the reviewer insisted no review had been made of my account in all the years the card was maxed, and the review that happened right after I paid it off was "random." So when they found my FICO score to be under 600, they couldn't see that I'd raised it 80 points recently. They say this is the first they'd noticed I was in trouble. So how much of that explanation is bull? Couldn't they tell I was having trouble paying my bills the last three years by the fact that a) the card was maxed the whole time, and b) my payments were late half the time? Was the review really random, or was it triggered by my payoff? And most importantly, should I not have paid off the balance when I had an infusion of cash?
Very little or any of it is bull. Banks are pulling the plug on people who want to get themselves out of the interest trap and pay things off too quickly. It would likely have been that even if you made a $200 payment, the limit on the card would have been dropped by $200. Don't feel singled out. Happening a lot.
But I'd been making small payments like that for years. The representative of of the credit review desk said my credit hadn't been reviewed all those years I was struggling. Then I suddenly pay off the balance, and three days later they lower my limit by 93%? i don't think that would have happened by chance, or it would have happened earlier. I still cry opacity.
Yes, this is quite common these days and the big payoff certainly triggered the credit limit cut. That's why it's always a good idea to have a backup credit card in these situations so you don't get left creditless.
