Is this credit 101?

[Anonymous]

I’m rebuilding my credit after a medical bankruptcy.

For many years, I haven’t had a credit card. I got two low credit limit cards with rewards. We decided I would use the cards regularly for gas and groceries and then pay off the balance every two weeks. Also, I put my tuition payment on one card for summer and then paid it off two weeks later and then put fall on the other and paid it off two weeks later.

Then I got an email alert that I was over the limit for the card that I had put the fall tuition on. I looked at the app which it said I had $180 credit. I figured it was a glitch so I ignored it. Then I got a credit alert that my credit score had fallen 10 points. I contacted the bank.

The bank held onto my last payment because it was “a large payment for an account that was less than six months old”.
The agent said she would release the payment. I asked that she send letters because my credit was dinged. She said the freeze on a large payment to a new account was credit 101.

That makes no sense to me. Why can I make a large charge to a new account if I can’t make a large payment that clears the balance? Is the goal to force me to pay interest?

And the “large” amount was less than $1700 in tuition and fees for a single course. Not money laundering amounts.

Plus, only one bank did this. The other didn’t care so it doesn’t seem like Credit 101.

My credit score is still seven points lower following this so I am pretty upset. Should I have known this practice.

[Anonymous]

I don’t understand. But it’s not uncommon for holds to be applied to large transactions (and $1,700 is plenty large) until the money catches up with the check. That’s usually on a deposit, however - you don’t have access to all the funds for a few days.

Not sure why you need to say “medical” bankruptcy, btw. Just say bankruptcy.

[Anonymous]

I haven’t heard of this but I suspect your credit will rebound from the 7 point ding very quickly.

[Anonymous]

Your post is a little confusing. I've never had a credit card let me go over limit. Debit yes, so they can collect fees.
I wouldn't worry about the credit score going up and down. It's very normal and 7 points is nothing. It can go 50 up and down easily.
Also, nothing you made here is a large payment. They are large payments for you and for your credit use. Keep charging the card and paying off. Building good credit again takes time.

[Anonymous]

Anonymous wrote:I don’t understand. But it’s not uncommon for holds to be applied to large transactions (and $1,700 is plenty large) until the money catches up with the check. That’s usually on a deposit, however - you don’t have access to all the funds for a few days.

Not sure why you need to say “medical” bankruptcy, btw. Just say bankruptcy.

I specified medical bankruptcy to make it clear that I wasn’t careless with money. There’s still a lot of stigma about bankruptcy in which people assume someone lacks a sense of accountability. I almost died so I had insane medical bills. I worked three jobs for six and a half years, but I was never going to be able to emerge from poverty.

I don’t know if it makes any difference, but I pay the CC bill by an electronic transfer from my bank. No check involved.

I could see the payment on the CC’s app. It just wasn’t credited somehow.

[Anonymous]

Anonymous wrote:Your post is a little confusing. I've never had a credit card let me go over limit. Debit yes, so they can collect fees.
I wouldn't worry about the credit score going up and down. It's very normal and 7 points is nothing. It can go 50 up and down easily.
Also, nothing you made here is a large payment. They are large payments for you and for your credit use. Keep charging the card and paying off. Building good credit again takes time.

Thank you for the reassurance.

[Anonymous]

Anonymous wrote:I haven’t heard of this but I suspect your credit will rebound from the 7 point ding very quickly.

Thank you.

[Anonymous]

Banks will do these things on new accounts because it appears to the actuaries who track this to be a form of credit "churning". that is customers (actually fraudsters) who use significant amounts of their available credit and thenpay it off early. The risk to the bank is automatic credit line increases that these people then fully use the limit and walk away. You can avoid this by either paying too much on the card in anticipation of a large purchase, or calling the bank and notifying them of what yo are about to do.

This isn't "credit 101", but it is common. Your credit will rebound quickly and you can expect monthly unexplainable fluctuations. Not to worry, it will stabilize over time.

[Anonymous]

Anonymous wrote:Banks will do these things on new accounts because it appears to the actuaries who track this to be a form of credit "churning". that is customers (actually fraudsters) who use significant amounts of their available credit and thenpay it off early. The risk to the bank is automatic credit line increases that these people then fully use the limit and walk away. You can avoid this by either paying too much on the card in anticipation of a large purchase, or calling the bank and notifying them of what yo are about to do.

This isn't "credit 101", but it is common. Your credit will rebound quickly and you can expect monthly unexplainable fluctuations. Not to worry, it will stabilize over time.

Thank you so much for the explanation and reassurance.

[Anonymous]

Seriously, stop over explaining about the bankruptcy. No one cares about the reason.

[Anonymous]

Anonymous wrote:Seriously, stop over explaining about the bankruptcy. No one cares about the reason.

Seriously, are you familiar with DCUM? People love to admonish and shame OPs here. Look at you, chiming in, not to help OP, but to give him/her a hard time for the way they explained their situation. Classic DCUM.