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Old 11-13-2008, 07:49 PM   #31
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Quote:
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 hope you're not doing this to be able to buy one of those unsafe trampolines.
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Old 11-13-2008, 11:43 PM   #32
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I hope you're not doing this to be able to buy one of those unsafe trampolines.
Do you think I'm crazy? Unsafe or not, trampolines are lawsuits waiting to happen. No way.
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Old 11-14-2008, 01:14 AM   #33
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What are the people at 800 doing that the ones at 730-760 are not? I know the rate benefit differential at that level is going to be negligible, but out of curiosity, how do some folks get up past 800? Do I have to open a few more cards, use them, and pay them off on time?
I dunno what specifically, but the old saying is people who can get credit don't need it. So the wife and I do things like take advantage of 90-days same as cash from time-to-time (like for furniture or electronics, average maybe once per year) and recently went for 0% for 3 years on a Toyota (50% cash paid) -- I don't guess anyone who watches sports has missed those commercials, ugh. Rather low debt to equity in the house, use credit cards but rarely carry a balance, keep the same cards a long time. Pay on time - most bills automated because I get forgetful in my old age

Does 800 make a difference? Somehow I thought thresholds for deals were more like 750.
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Old 11-14-2008, 06:24 AM   #34
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[QUOTE=NorCalCoug;294518]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. "

Lowering an un-utilized balance is NOT considered an "adverse action." It does not require compliance with Reg B - notification of the reason for adverse action.

If you called up and asked for a line increase, and they denied it, they'd have to notify you in writing why they did. But lowering an unused line is considered a positive risk avoidance action for both the company and you, and doesn't even require that they tell you they've lowered your line - except in your monthly statement.
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Old 11-14-2008, 05:01 PM   #35
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[QUOTE=statman;295042]
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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. "

Lowering an un-utilized balance is NOT considered an "adverse action." It does not require compliance with Reg B - notification of the reason for adverse action.

If you called up and asked for a line increase, and they denied it, they'd have to notify you in writing why they did. But lowering an unused line is considered a positive risk avoidance action for both the company and you, and doesn't even require that they tell you they've lowered your line - except in your monthly statement.

Sorry, but you're wrong. A non-customer initiated line reduction on an active account in good standing is VERY much considered an adverse action and falls under Reg B.

Last edited by NorCalCoug; 11-14-2008 at 05:31 PM.
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Old 11-15-2008, 05:19 AM   #36
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You most certainly can lowera credit line without notification or adverse action. It depends entirely upon how how the decision is made.

IF credit scores or bureau data was used to lower the limit, an adverse action letter must be issued, but this is often not the case. Lines are often dropped simply because the person isn't using them - no internal or external credit scores used in the decision = no adverse action. I used to do it all the time. And one of my cards just did it to me.
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Old 11-15-2008, 06:00 AM   #37
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I just read-up on it a bit & i remember what our lawyers used to quote us - First: (from 202.2)

Definition of adverse action: "(ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor’s accounts; "

In other words, if it DOES affect all or substantially all of my accounts - like an across-the-board reduction in unutilized credit line - and I don't use credit information in making that decision, it's not an adverse action situation and I don't need to notify the customer of anything.

The stated reasons for notifcation - as specified in Reg B - is to keep consumers informed and up-to-date about their credit information & how it is being used. If I make a lending/exposure/policy decision that is applied across the board and doesn't use credit information, I have no need to inform them. It has nothing to do with their credit...
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Old 11-15-2008, 05:03 PM   #38
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Originally Posted by statman View Post
I just read-up on it a bit & i remember what our lawyers used to quote us - First: (from 202.2)

Definition of adverse action: "(ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor’s accounts; "

In other words, if it DOES affect all or substantially all of my accounts - like an across-the-board reduction in unutilized credit line - and I don't use credit information in making that decision, it's not an adverse action situation and I don't need to notify the customer of anything.

The stated reasons for notifcation - as specified in Reg B - is to keep consumers informed and up-to-date about their credit information & how it is being used. If I make a lending/exposure/policy decision that is applied across the board and doesn't use credit information, I have no need to inform them. It has nothing to do with their credit...
I'm not sure any reasonably managed credit card portfolio has ever reduced lines on "all or substantially all" of the portfolio. If so then the Risk Management team needs to be fired - or hired b/c this would suggest a lack of true Risk Management as far as I'm concerned. Any line reduction strategy will be very targeted in nature due to the revenue and profitability implications of taking such action. You're comparing apples to oranges. I'm assuming that it wasn't a portfolio-wide reduction b/c there's no precedent for such drastic action that I'm aware of on a major card portfolio in the 10+ years I've spent working on various Top 10 US card portfolios. I view quarterly reports from VISA on industry trends and line reduction strategies only target a very small proportion of total accounts on the portfolio (<5%) on average - EVEN in this horrible credit environment where banks have ramped up such initiatives to try and mitigate losses.

Like I said previously, the laws and regulations are different in the case of inactive or delinquent accounts but this doesn't appear to be the case. Perhaps the original poster who posed the question has a card with a small bank or credit union and that type of drastic action may be the case (portfolio-wide reduction of credit line) but I assure you that it's not a card from a major issuer if it is. An adverse action letter would otherwise be required citing specific reasons (as required by Reg B) for the action and contact information if third party information, i.e. - credit bureau, etc., is used in the decision (as required by FCRA).

Last edited by NorCalCoug; 11-15-2008 at 05:12 PM.
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Old 11-17-2008, 12:07 AM   #39
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I've literally done millions of them - with the full constent of OCC regulators. We had strategies installed in our automated systems that would reduce lines for customers that weren't using them. The line reductions didn't happen to all accounts, but they potentially could have - almost all accounts in a given portfolio were subject to them. As long as that was the case - that most cards fell into the automated decision engine - and that no credit data was used other than balance utilization & balance history, our regulators were perfectly fine with it. In fact they liked it. We could show that it curtailed instances of run-away credit for customers whose credit suddenly deteriorated. And we got their lines lowered before their credit actually got worse.

BTW - I think that another legal argument used in doing these without adverse action notification is that if we could show in each case that there were long periods where only a fraction of the line was used, that 1) this portion of the line was essentially 'inactive,' and also that by lowering the line to closer to what was actually used didn't inherently affect the status quo of the credit relationship. In other words, if a customer only ever used a maximum of $2000 of a $25000 line, and we dropped their line to $8000, we weren't really impacting their use of credit significantly. And we could show with hard data that if a customer with that credit behavior ever was to suddenly increase his use of credit dramatically, the probability of charge-off rose exponentially. Lowering lines was good for us and good for them.

Our lawyers said it was all kosher, and the OCC agreed. I'm sure they had opinion letters from everyone and their dog okaying the process. We didn't walk across the street without Legal's okay...
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Old 11-17-2008, 05:00 PM   #40
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Honestly, I'm not going to debate it with you. I devote enough of my life already to the subject and I'm plenty comfortable enough with my experience to frankly not care to debate it with an anonymous poster on a forum I frequent for leisure. The original poster can do what he will with the information I provided.

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