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Old 11-11-2008, 07:13 PM   #21
PaloAltoCougar
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Originally Posted by CardiacCoug View Post
My credit score is 805 as of a month ago.

One thing that probably helps (I don't know for sure) is that I have some very high limits on a bunch of credit cards that I never use. I have one card with a $30K limit and another with a $40K limit and several other with about $15K limits. I don't ever carry a balance. I think one factor is the debt to available credit ratio and if you keep that very, very low I believe it helps your score.
With a home purchase and then a refi within the past year, we had our scores checked a couple of times, and averaged in the low 800s. The loan-to-value on our house is fairly low, we have three credit cards with limits around $40K but which we pay off each month (we rotate their use to maximize AA, Southwest and Marriott rewards), and no other debt. I joke a lot otherwise, but I'm married to a very thrifty woman, for which I give daily thanks.
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Old 11-11-2008, 10:37 PM   #22
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The larger driver in terms of a "ding" on your credit report will be the utilization of your revolving trades. Higher utilized customers tend to be significantly higher risk. For example, you have 2 cards with $10K limits and carry a total balance of $4K on one of your cards making your utilization 20% ($4K / $20K in total credit available). You decide to close the other card and the next time the bureaus refresh your scores your utilization suddenly calculates at 40% and you appear as higher risk thus the "ding" to your bureau score. If you convert and keep your available credit limit then the impact should be minimal. The age of your oldest trade is also fairly important but not as much in terms of negative impact IMO. If your other card is older then this may be of little or no consequence.

All in all, I think the impact would be minimal if you convert the card.

Last edited by NorCalCoug; 11-11-2008 at 10:39 PM.
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Old 11-12-2008, 12:27 AM   #23
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What about applying to increase your credit limit? I have an AMEX balance that is at 3.99%, so I haven't bothered to pay it off. I opened the account when we had an emergency in residency and I've just been paying minimum payments since then. They recently informed me that they have decreased my credit limit on the account (meaning I now owe about 80% of my limit); I called and they couldn't give any reason. I wouldn't care, except that we're about to buy a house in the next few months and I would like my credit rating as high as possible. I have a higher income than they think, so I'm sure I could qualify for a higher limit and I've never made a late payment. Does it hurt your credit score to apply for an increase in limit? If so, which is worse--high debt-to-limit ratio or applying for an increase?
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Old 11-12-2008, 06:50 PM   #24
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Do using cash advances on credit cards impact credit score?

(assuming they are immediately paid off and not carried as part of balances, as discussed above)
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Old 11-12-2008, 11:06 PM   #25
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What about applying to increase your credit limit? I have an AMEX balance that is at 3.99%, so I haven't bothered to pay it off. I opened the account when we had an emergency in residency and I've just been paying minimum payments since then. They recently informed me that they have decreased my credit limit on the account (meaning I now owe about 80% of my limit); I called and they couldn't give any reason. I wouldn't care, except that we're about to buy a house in the next few months and I would like my credit rating as high as possible. I have a higher income than they think, so I'm sure I could qualify for a higher limit and I've never made a late payment. Does it hurt your credit score to apply for an increase in limit? If so, which is worse--high debt-to-limit ratio or applying for an increase?

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.
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Old 11-12-2008, 11:07 PM   #26
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Do using cash advances on credit cards impact credit score?

(assuming they are immediately paid off and not carried as part of balances, as discussed above)
No.
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Old 11-13-2008, 12:53 AM   #27
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Originally Posted by Bruincoug View Post
Do using cash advances on credit cards impact credit score?

(assuming they are immediately paid off and not carried as part of balances, as discussed above)
As NorCal said, no, it won't hurt, since the bureau has no way of knowing what type of balance is on the card. All balances are reported the same way.

Having said that, it MIGHT make the bank you have the card with look on you as a higher risk. Customers who get cash advances are riskier than others, so there is a chance it could cause some minor effects at that bank. Shouldn't be anything you notice, though. For example, you might get a call if you are 5 days late on a payment, versus other people who would get a call at 30 days.
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Old 11-13-2008, 02:11 AM   #28
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Originally Posted by NorCalCoug View Post
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.
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Old 11-13-2008, 06:07 PM   #29
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No.
Thanks, NCC.
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Old 11-13-2008, 07:30 PM   #30
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Originally Posted by ERCougar View Post
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.
I don't think so. When you make your request they will most likely pull a credit report on you which leaves a "hit" on your credit. Excessive "hits" can hurt your score but a single incident shouldn't. Keep that in mind as you're shopping around for a mortgage as well b/c as you go through the pre-qualification process a credit report will be pulled.
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