According to the AP Article, Major changes coming to how your credit score is calculated, “VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly.” This is something that seemed fairly obvious but was not taken into account in old calculations. An individual may have a credit line of 200k and may have never missed a payment. Then that person may lose his job, get into a car accident, face high medical bills, and not have that quacky insurance. What insurance is that? Desperate, the individual who had a stellar credit score of 800 may turn to credit cards for a bailout. It makes sense that a bank would want to limit this exposure.
This recalculation could hurt churners. Churners tend to have multiple cards and high credit limits. Going forward, it may make sense to lower those limits at the expense of not being able to boast about how much available credit has been extended.
The lack of logic in this decision is ridiculous. Generally, credit limit is commensurate to credit score so there’s a tons of irony embedded in this.
From a consumer perspective, I don’t see the logic in giving me a 20k limit on a card and then on another, and another and another. The bank extends credit all day in the hopes that person gets into debt forever.
Sure – they’re banks competing for your business. With an 800 FICO / Vantage, the risk of you maxing out a card is very low considering you likely have not done it in the past. Further, if you already have an 800 credit score and $20k limit, the likelihood of you using a credit card with a $2k limit is very low.
I agree with you. I see the logic in both. Just get rid of the stupid churning rules and leave me be.
Agreed. Better yet, use the Citi approach of “accidentally” giving away AA new bonus miles lol.
Vantage scores are fake…. who cares. AMEX keeps increasing my limit every year without asking.
True