Quote:
Originally Posted by NorCalCoug
By law (Reg B) they have to disclose the reasons for adverse action within 30 days. The only time that this isn't required is if you are in "breach of contract" - in other words delinquent. If they can't give specific reasons then they are out of compliance. This will typically happen in one of two ways:
1. Specific adverse actions are disclosed in the letter informing why they reduced your line - FAR more common b/c it is a much better customer experiance (well given the circumstances  ). These adverse action reasons come from the credit scores or criteria that are used in targetting you for the action. For example, if they use FICO then there are certain variables in the model that carry the largest weight in your score being what it is and there is verbiage that corresponds with that (reason codes). When credit bureaus send a credit score it is usually accompanied with the top 4 reason codes associated with why that score is what it is.
If this is the type of letter you received and they did use a bureau score like FICO then to be FCRA compliant there would be contact information for the bureau they used so you could dispute any incorrect information on the bureau that may have led up to the score being low and hence a line reduction.
2. On rare occasion they will state in the letter that you are entitled to have reasons for adverse action disclosed to you within 30 days if you submit for it via letter or call. This isn't too common as far as I know but some do it.
3. The only exception as I said is if you were in "breach of contract" or delinquent. Banks aren't required to disclose reasons in that scenario so your letter would cite delinquency or breach of contract as the reason.
Sorry if this is confusing but I'm trying to explain it in a very simplistic way. |
I was notified by email. I guess they're going to be sending me a letter in the next few days.
But back to my question--does it affect my credit score to apply for a limit increase? Or should I just pay it off? I could pay it down, but I'm saving for a down payment on a house, and since we don't have a house picked out yet, I'm not sure how much I'll need. I would like to have 20% to avoid the PMI.