How do CC determine whether to approve credit limit increase?

[PibbZero]

I used to have a Chase CC back in college (about 9 years ago) and I remember they used to "jack up" my credit limit almost randomly.  Started off with a $3000 limit and within 5 years, the credit limit had increased to $13,000.  Unfortunately, I was young/immature/naive and got myself into financial trouble with the high credit limit (couple 90+ day and a handful of 30+ day late payments).  I ultimately enrolled in a credit counseling program and eventually paid off the CC debt.  However, one of the requirements for enrolling in the program was that the card would be canceled. 

Anyway, I've greatly improved (not perfect, but trying to get better) in managing my finances since my college days.  I have not had a late payment in nearly 2 years and successfully raised my FICO score from about 528 to 691 (TU) / 678 (Equifax).  I currently have 2 CCs with credit limits of $3500 (Capital One; opened 11/2006; 2 30 day late payments back in 2007) and $500 (Barclays Bank; opened in 6/2007; 1 30 day late payment back in 2007).  Currently, I carry no balance on the cards, but I have maxed out the cards in the past.  

Right now, my current yearly income is about $24K (grad student).  When I graduate this May, I'm expecting my starting salary to be at least $40K (depending on whether I go into public sector or not).  I would like to buy my own home within the next 2-3 years and therefore, trying to find ways to further improve my credit score.  One of the "negative" factors on my report is the high use of revolving credit limit in the past and so, I'm hoping to increase the overall revolving credit limit.  I have asked both my CC companies in the past (1-2 years ago) for a credit limit increase and have been denied. 

Sooooooooo my question is how do CC companies determine whether to approve credit limit increase or not?  Considering both the increase in salary and the improved FICO score compared to when I last asked for an increase, will I be more likely to be approved this time around?  I've read on here that asking for a credit limit increase could result in a "hard" inquiry, which could result in a slight drop in FICO score.  Therefore, I would like to avoid a scenario where I'm not only denied for an increase, but also where my FICO score decreases.  

Along these lines, is it easier to be approved for a credit increase or for a new card completely?  Obviously, I'd like to avoid opening a new CC account, if possible.

Thanks in advance for all your help.

P.S.  Oh by the way, I do have student loans (~$100K) that are currently in deferment and am planning to enroll in the income-based repayment option (~$275/month) should I take a job in the public sector.  Not sure how this might play in determining whether I'll be approved for an increase in credit limit. 

[llecs]

Getting CLIs in and of itself won't increase your scores or improve your credit. It's how you use the CL that matters. Utilization is only a snapshot of the moment you pull your report. IMO, I'd focus on lowering balances. Get one to report $0 with the other reporting a balance of under 9%.

Now if you want a CLI for usage reasons, then look around to see if that CCC pulls a hard inquiry. CapOne isn't known for granting CLIs after requesting it. In fact, I don't recall a single CLI in recent months from CapOne when requested from the account holder. The do grant CLIs automatically from time to time, though, but that's sporadic and not too common. Barclays recently rebranded from Junny. I don't know how the new Barclays is on CLIs, but when my Seamiles was with Junny, I requested a CLI last June and got a nice one (to $1500 from $400) at the cost of a hard inquiry. Seems like they always request a hard inquiry for each CLI request. IMO, make sure your Barclays is reporting at $0 when you ask for the CLI if you do so.

CCCs' policies are a YMMV thing. Some require hard pulls and some don't. Some like to see $0 balances and some don't care. Some don't like high balances. Some respond negatively to outside factors like lates, recent baddies, new TLs, etc.

Do you think you might need a new CC? Your combined CLs are $4000. Do you need to spend more than $4000 per month on CCs?

[DI]

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Do you think you might need a new CC? Your combined CLs are $4000. Do you need to spend more than $4000 per month on CCs?

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I ask myself these questions, but, I still be wanting to see higher limits.  I spend no more than $500 amongst all my CC's with a $28,600 CL.  

[PibbZero]

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@llecs wrote:

Do you think you might need a new CC? Your combined CLs are $4000. Do you need to spend more than $4000 per month on CCs?

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Thanks for the reply!  In answer to your question, no, I do not need to spend more than $4000/month.  However, if I'm trying to keep my utilization to under 10%, doesn't that mean that of the $4000 CL, I should really not be spending more than $400/month?  Like I said, I've gotten much better with my CC usage and I rarely carry a balance anymore, but I guess I'd be a bit more comfortable, if I had a higher CL.

[llecs]

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PibbZero wrote:

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@llecs wrote:

Do you think you might need a new CC? Your combined CLs are $4000. Do you need to spend more than $4000 per month on CCs?

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Thanks for the reply!  In answer to your question, no, I do not need to spend more than $4000/month.  However, if I'm trying to keep my utilization to under 10%, doesn't that mean that of the $4000 CL, I should really not be spending more than $400/month?  Like I said, I've gotten much better with my CC usage and I rarely carry a balance anymore, but I guess I'd be a bit more comfortable, if I had a higher CL.

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Nope. CCCs, er...um, most CCCs report the balance you had on the day the statement cut. In your two examples, both of your CCs cut the balance to your CR the day the statement comes out. So, you can use 10%, 50%, 200% of the CL (recommend making more than one payment if you go over 100% for obvious reasons). Just make sure your balance is where you want it by the time the statement is produced.

Now as mentioned by DI, if your goal is to have higher CLs for whatever (e.g. for major purchases, wriggle room just in case one CC closes, CLDs, etc.), then get another card.

[PibbZero]

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@llecs wrote:

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@PibbZero wrote:

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@llecs wrote:

Do you think you might need a new CC? Your combined CLs are $4000. Do you need to spend more than $4000 per month on CCs?

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Thanks for the reply!  In answer to your question, no, I do not need to spend more than $4000/month.  However, if I'm trying to keep my utilization to under 10%, doesn't that mean that of the $4000 CL, I should really not be spending more than $400/month?  Like I said, I've gotten much better with my CC usage and I rarely carry a balance anymore, but I guess I'd be a bit more comfortable, if I had a higher CL.

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Nope. CCCs, er...um, most CCCs report the balance you had on the day the statement cut. In your two examples, both of your CCs cut the balance to your CR the day the statement comes out. So, you can use 10%, 50%, 200% of the CL (recommend making more than one payment if you go over 100% for obvious reasons). Just make sure your balance is where you want it by the time the statement is produced.

Now as mentioned by DI, if your goal is to have higher CLs for whatever (e.g. for major purchases, wriggle room just in case one CC closes, CLDs, etc.), then get another card.

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Ahh.  I see.  I did not know that.  Thanks. 

I guess I'll hold off on trying to get a credit limit increase, since I don't really need it right now if it's not going to help me improve my FICO score. 

Thanks again for all the helpful input!