BTs, CLIs, and APR Reductions with High Util.

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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CarefulBuilder14
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BTs, CLIs, and APR Reductions with High Util.

Postby CarefulBuilder14 » Mon Sep 29, 2014 9:38 pm

Let's say someone has a balance of $3k on a card with an $10k limit. This person has been making timely payments, but has not been paying in full. No baddies, and maybe two or three years of credit history.

Such a person could probably qualify for a BT card with pretty good terms, and would have a few options like Slate or IT. Getting an APR reduction or a CLI might be tricky, but not out of the question. A credit union could also offer a BT with good terms.

But when someone has significantly higher overall utilization, along the lines of 75% or higher, the usual advice is to just pay it off ASAP. Posters on here assume (rightly or wrongly, I don't know) that no one will touch a borrower with very high utilization.

I'd be curious to hear any stories people have had in successfully getting CLIs, BTs, and/or APR reductions in cases where their credit profile might suggest they were considered high-risk in the eyes of lenders due to very high utilization. Has anyone, for instance, been able to get any help when already using $12k of a $15k CL?
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takeshi
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Postby takeshi » Tue Sep 30, 2014 12:58 pm

This doesn't fit your question exactly since you seem to be looking for anecdotal evidence of the opposite. However it is an example of the limiting effect of high utilization.

Back at the tail end of 2012 I had very high utilization. I don't recall the exact figure but it was over 60% and I had been balance chased on at least one card because my utilization had been high for months. I applied for a Chase Slate so I could do a BT. I was approved but I received a $2K limit and the highest APR offered.

After that I managed to educate myself a bit better and I was in the position to drop my utilization to well under 10%. Again, I don't recall the exact figure. I closed the Slate because it was pretty much useless to me.

In 2013 -- 6 months after the Slate approval -- I applied for a UMPE and then a CSP the following day. Both were instantly approved for $25K limits each. Neither of those cards have a range of APR's offered but I applied for a BCP on the same day as the UMPE. It was also instantly approved -- only $12,400 but they bumped it to $25K at my request on day 61. While it didn't get the lowest APR possible it did get 14.99%.

My income and the other factors did not drastically change in those 6 months. Just utilization. Dropping it enabled me to increase my total limits nearly tenfold. Granted, that's because the rest of my credit was strong but high utilization was preventing me from making any progress.

It's not that creditors won't touch anyone with high utilization -- though more conservative creditors may not. It's certainly possible to get approvals with high utilization but it can be severely limiting as well as trigger adverse action if prolonged. Utilization definitely plays a significant role in credit scoring and assessment. For FICO it's the second most important factor behind Payment History.
http://www.myfico.com/crediteducation/whatsinyourscore.aspx

I wouldn't recommend anyone assuming that their credit is in good shape for applications, CLI requests, APR reduction requests, etc if Payment History and/or Utilization aren't in good shape.

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Postby CarefulBuilder14 » Tue Sep 30, 2014 5:45 pm

Thanks for the input, takeshi!

What you say makes sense. Chase saw you had a good history but wanted to limit their exposure.

Creditboards pull records show some people can get a Slate BT with utilization around 50% or 60%. If you have a history of timely payments, but still can only get a $2k limit, I guess that's an indication that slightly higher utilization could lead to a declined application.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when



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