Increase Credit Availability to Improve Credit Utilization?

[Ghoshida]

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@skigirl916 wrote:

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@longtimelurker wrote:

As a contrary view: utilization only matters when you are applying for loans, and if you don't plan to get any in the near/medium term, it doesn't really matter.   Also, if you really needed to, you can keep your reported balance down by paying before the statement cuts.

So, if you feel OK now, and don't want another card, I wouldn't bother.   But that's a minority view here, where big CL and CLIs are what life is all about!

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I couldn't disagree more.  UTL is a very large factor in your FICO score and getting approved for pretty much anything.

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I believe both of you are saying the same thing: Utilization impacts FICO score which impacts the application / approval. So improve utilization before applying (and for peace of mind in general). But playing with utilization on a day-to-day basis is not a necessity.

[skigirl916]

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@Ghoshida wrote:

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@skigirl916 wrote:

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@longtimelurker wrote:

As a contrary view: utilization only matters when you are applying for loans, and if you don't plan to get any in the near/medium term, it doesn't really matter.   Also, if you really needed to, you can keep your reported balance down by paying before the statement cuts.

So, if you feel OK now, and don't want another card, I wouldn't bother.   But that's a minority view here, where big CL and CLIs are what life is all about!

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I couldn't disagree more.  UTL is a very large factor in your FICO score and getting approved for pretty much anything.

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I believe both of you are saying the same thing: Utilization impacts FICO score which impacts the application / approval. So improve utilization before applying (and for peace of mind in general). But playing with utilization on a day-to-day basis is not a necessity.

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The OP is looking for a long-term solution to improving his only source of credit deficiency: utilization rate.

Sure, he could pay down.  That would be a short-term solution.

Long term, he'd be better served in taking an INQ and getting another card - a high limit card, which he should be able to get with his score - so that he can actually use his cards without fear of having a high utilization at any given moment.  His score will rebound really quickly from any potential ding the INQ causes. 

[lhcole77]

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@Anonymous wrote:

I'm in my 30s with a good credit history (usually high 700s, currently 813). When comparing to others with high credit scores, my largest deficiency is typically in my credit utilization rate. I have 3 credits cards, with a combined credit availability of about $20k ($17k is on one card), but I only really need about $4k of that credit. Utilization usually runs a little over 10% for me. Currently, I don't see the need to apply for any credit in the next couple of years.

My question is this - is it worth applying for a high-limit credit card or increasing the limit on a card in order to increase available credit and decrease my utilization for the long term? 

Thanks for any advice.

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Welcome to the Forum! Great topic too.

When I started building my lineup I made sure to get cards that I really wanted and that offered some nice perks. As I've grown so, too, have my limits and I have added some other cards to have diversity, for fun and to have in case I need to carry a balance (so UTL will not be an issue).

So far, so good.

Do you like to travel? With scores like yours you could get some nice sign up bonuses....

[SunriseEarth]

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@Anonymous wrote:

Capital One No Hassle (basically Venture now), Discover, Banana Republic

C1 recently involuntarily increased my limit, which was nice. I requested an increase from Discover last year and got a modest one. The BR card was a mistake and is only open because it's a plus on my credit history.

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Has it been more than 6 months since your last Cap One CLI?   If so, go online and request one.   The BR card has good rewards that you can accumulate there, as well as Gap and ON, so there's a place for it in your wallet for purchases at those stores.   If you've generated at least 4 statements since you last got a CLI with that card, I'd hit the LUV button on that site, too.   You can also call the GECRB Credit Solutions # in the "Backdoor Numbers" sticky thread.  Aim for the moon and they'll counteroffer.

Others will have to comment on Discover, but they do give out SP CLIs from time to time.  

[SunriseEarth]

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@longtimelurker wrote:

As a contrary view: utilization only matters when you are applying for loans, and if you don't plan to get any in the near/medium term, it doesn't really matter.   Also, if you really needed to, you can keep your reported balance down by paying before the statement cuts.

So, if you feel OK now, and don't want another card, I wouldn't bother.   But that's a minority view here, where big CL and CLIs are what life is all about!

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Some members prefer to keep "optimized" at all times, perhaps as a "just in case" measure.   The OPs scores are pretty stellar, so any improvement would just push him closer to that perfect 850 score and probably wouldn't have a real impact on his approvals or terms.   Anything above 760 will generally get you the best terms.  

[longtimelurker]

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@skigirl916 wrote:

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@Ghoshida wrote:

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@skigirl916 wrote:

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@longtimelurker wrote:

As a contrary view: utilization only matters when you are applying for loans, and if you don't plan to get any in the near/medium term, it doesn't really matter.   Also, if you really needed to, you can keep your reported balance down by paying before the statement cuts.

So, if you feel OK now, and don't want another card, I wouldn't bother.   But that's a minority view here, where big CL and CLIs are what life is all about!

---

I couldn't disagree more.  UTL is a very large factor in your FICO score and getting approved for pretty much anything.

---

I believe both of you are saying the same thing: Utilization impacts FICO score which impacts the application / approval. So improve utilization before applying (and for peace of mind in general). But playing with utilization on a day-to-day basis is not a necessity.

---

The OP is looking for a long-term solution to improving his only source of credit deficiency: utilization rate.

Sure, he could pay down.  That would be a short-term solution.

Long term, he'd be better served in taking an INQ and getting another card - a high limit card, which he should be able to get with his score - so that he can actually use his cards without fear of having a high utilization at any given moment.  His score will rebound really quickly from any potential ding the INQ causes. 

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His utilization rate is around 10%, and his scores are high, so going to 5% or 1% will make no practical difference.  It just depends if you are happy with the benefits of your current set or not (and whether you feel that adding more leads to too much management).  You can always get more cards, why, with your view, should he stop at one more?

[takeshi74]

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@Anonymous wrote:

My question is this - is it worth applying for a high-limit credit card or increasing the limit on a card in order to increase available credit and decrease my utilization for the long term? 

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It generally doesn't hurt to have higher limits but whether or not you'll see a significant improvement depends on the CLI that you can receive, the impact it would have on your utilization and how the change in utilization would affect your specific credit profile.  Whether it's worth it (always highly subjective) depends on those factors and how you prefer to manage/reduce your utilization.

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@skigirl916 wrote:

The OP is looking for a long-term solution to improving his only source of credit deficiency: utilization rate.

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Where was it indicated that it was the OP's only deficiency?  Just above 10% utilization isn't bad at all.  Lower is generally better but it's hyperbole to call that level of utilization  a deficiency IMO.

Changes to utilization could be handled multiple ways as indicated above.  It's really the OP's call as to which is the preferred method.

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@skigirl916 wrote:

Long term, he'd be better served in taking an INQ and getting another card - a high limit card, which he should be able to get with his score - so that he can actually use his cards without fear of having a high utilization at any given moment.

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OP doesn't see a need to apply for more so I'm not sure how this is better (another highly subjective word) for the OP.  OP was asking about requesting CLI's on existing cards to improve utilization.  Again, reported utilization can be managed more than one way.

[Anonymous]

A lot of really great discussion here - thanks for that!

First and foremost, I wanted to know if the decreased utilization of adding another high limit card would provide a net benefit in the long-term with the added account and inquiry. It appears the answer to that question is yes. 

Currently, I focus most of my spending on my Capital One card, using the Discover card as a backup (the C1 card has been stolen twice in the last couple of years) when C1 doesn't work. I would like to have a backup card with a higher limit, similar to my C1 card, as the limit on my Discover card does not even cover my typical monthly expenses. When I asked for an increase on the Discover card, they gave me something like $300, whereas the C1 recently just handed me $5k without even asking. I feel like the Discover card is not even in the right league.

Assuming my thought process is correct here, I'm thinking I should apply for a new high limit card. I don't intend to use this card a whole lot, so rewards are probably not as important as odds of getting an initial high limit (although a sign-up bonus might be nice). Also, I doubt it would be worth paying an annual fee. Any suggestions on the best card to apply for?

Thanks again!

[red259]

In OPs situation there are a couple of things I would point out. I would recommend OP app for a new card instead of just increasing limits on current cards. Its doubtful OP will get a CLI of an amount as high as a CLI on an exisiting card. In addition, I am a big believer in diversity of lenders. The BR card isn't really a serious credit card so now we are down to Discover and Cap 1. Cap 1 has the large credit line and the discover card does not even have a high enough limit to cover OPs monthly expenses. What if something happened and Cap 1 took AA? OP would be screwed in that scenario, because there is not a sufficient backup. I would recommend OP look at Chase or Amex cards. The reason being is with Chase they have a tendency to give high initial credit lines and with Amex you can get SP CLIs. It sounds like OP spends enough to meet min spend requirements, so a rewards card may fit nicely here. I wouldn't rule out a card just because it has an AF depending on how you will redeem the rewards you can more than offset the AF. Also many reward cards waive the AF for the first year and you can elect to downgrade to a non-AF after the first year. If your just not interested in rewards or travel at all then look into the cash back cards. The citi double cash back card has no AF and you can try for SP CLIs, but they will likely not be as a generous as chase or amex. The hit of the inquiry or new account posting is not going to be that significant and in the long run it will be much more beneficial to your overall credit. 

[Anonymous]

Thanks so much for everyone's help, just wanted to follow-up with my decision and result. 

Decided to go with an AMEX because of the potential for future CLI's (according to y'all) and in order to spread my card issuers (now have Visa, Discover and Amex).

Filled out the online form and was immediately approved for 18K. Was hoping for half of that, so I'm very pleased. Thanks again for the help.