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This is why you should never go over 50% utilization as the lenders cannot distinguish between that and bust out fraud Lenders risk models are based on likelih

This is why you should never go over 50% utilization as the lenders cannot distinguish between that and bust out fraud Lenders risk models are based on likelihood of intent to pay, of which they can only use heuristics So at 50-60% the non-hit lenders will much more likely cancel your credit cards For the person that didnt intend to bust out, this then boosts their utilization to 100% or even higher, if one of your cards was cancelled even with a balance on it This puts an otherwise good borrower into a credit death spiral if they actually werent in a place to pay the debt down fairly immediately Maintaining standing in this society is all about psychology and understanding what matters to whom, unsecured credit has a bust out fraud risk You can game this by getting much higher credit limits before you ever would need them, because then your 10, 20, 50% utilization amounts are proportionally higher too. If you have a spending problem, ever, then you lose standing in this society. Cheers

dataflow 5y ago
Why do lenders give high credit limits that they wouldn't tolerate to begin with?
- brainwad 5y ago
  They would tolerate and even want high utilisation by a normal customer; the problem is fraud. As fraudsters want to get the most out of each crime, they are likely to hit 100% utilisation. So 100% utilisation is a red flag for fraud, especially if it's on every account at once instead of just one card. It's not really something that the bank can fix by changing the amount of its credit lines. That would only change the dollar amount that each fraud would cost; the fraudsters will still maximally use the credit line no matter its size.
- vmception 5y ago
  They want the business. You could choose to use their credit line, or one of the other lenders. An individual lender will [more likely] tolerate the credit limit. Their reaction changes when they can see all the other lenders lines are being used too. Think of it like giving a girl (or anyone you like) a valentine’s day gift, and then seeing them walk down the hall with a ton of valentine’s gifts. You and some others will consider retracting their benefactorship if you could and more would consider not giving any more.
- LorenPechtel 5y ago
  High limits that quickly get paid down are not a problem. I've even once called my CC company to request an increase specifically for the purpose of putting through one large charge to get the rewards on it--I explained exactly why I wanted it. (It was going to cost me the same if I used a CC or a check.) I paid off the pending amount at the time so the whole amount was available. One big charge, paid off next month, then back to normal.

dataflow 5y ago

Why do lenders give high credit limits that they wouldn't tolerate to begin with?

brainwad 5y ago
They would tolerate and even want high utilisation by a normal customer; the problem is fraud. As fraudsters want to get the most out of each crime, they are likely to hit 100% utilisation. So 100% utilisation is a red flag for fraud, especially if it's on every account at once instead of just one card. It's not really something that the bank can fix by changing the amount of its credit lines. That would only change the dollar amount that each fraud would cost; the fraudsters will still maximally use the credit line no matter its size.
vmception 5y ago
They want the business. You could choose to use their credit line, or one of the other lenders. An individual lender will [more likely] tolerate the credit limit. Their reaction changes when they can see all the other lenders lines are being used too. Think of it like giving a girl (or anyone you like) a valentine’s day gift, and then seeing them walk down the hall with a ton of valentine’s gifts. You and some others will consider retracting their benefactorship if you could and more would consider not giving any more.
LorenPechtel 5y ago
High limits that quickly get paid down are not a problem. I've even once called my CC company to request an increase specifically for the purpose of putting through one large charge to get the rewards on it--I explained exactly why I wanted it. (It was going to cost me the same if I used a CC or a check.) I paid off the pending amount at the time so the whole amount was available. One big charge, paid off next month, then back to normal.