Request an Increase in Credit?

[maryellis1981]

Hello- I'm looking for some advice.

Back in 11/2010 I had a short sale due to a divorce.  When my short sale closed I was 90 days past due on my mortgage.  In 1/2011 I received a letter from Discover indicating that they would be dropping my credit line from $2500 to $500, I assumed that this credit line decrease was due to the short sale since I have never had and still have not had any other late payments.  Any way over the past year I have worked on rebuilding my credit including using my Discover and paying it right down.  My credit scores have recovered nicely and are in the low 700's.

My question is I am hoping to purchase another home (something I can afford on just my income) spring 2013.  Do you think I should call Discover and request a credit line increase?  I assume since this would increase my credit utilization it would also increase me credit score?  About how many points would it bump up my score?

Thanks!

[Anonymous]

maryellis1981,

I would actually advise you to apply for a free Score Watch ten day trial. The free trail would include a score simulator that would be able to take into consideration some factors on your credit report that we might miss - or you might not feel comfortable releasing .

Also, I recently called Discover and they actually would take into consideration a credit limit increase through a soft inquire, so that might bump your score. However, I would just make sure to verify that it is indeed a soft inquire.

All the best,

[llecs]

OP, increasing your CL will not increase your score because FICO is indifferent to your CL. However, FICO scores on the utilization on that card so it looks at how you us it in relation to the reported CL. Someone with a $0 on a $500 CL is no better off FICO-wise, than someone with $0 on a $50,000. Your score will only change if you kept a high util on your other CCs, whereby an increase in CL on Discover will lower your overall util and thus improve scores.

[Creditaddict]

Is Discover Card your only current open Credit Card?

If you are over a year from applying for mortgage I would increase the number of accounts and the CL's on those accounts.

Look at a Citi card, they seem to hand out very large CL's and give increases every 4 months.

You can go through automated on Discover phone for CLI and if approved it's soft, if it transfers you and you let a rep look at it I believe they do hard.  If this is your only account I would suggest getting a couple others and wait for them to report with the higher CL's and then apply for the CLI with Discover so that they see you have higher limits.

[maryellis1981]

Thank you everyone for the responses!

The Discover card isn't my only card.  I have an AMEX, Citibank MC, and Chase Visa.  I think the total CL for all of those 3 cards is $20k - $25k.  Discover was the only credit card who dropped my CL following the shorte sale.

I would really prefer not to open any other accounts.  So given the current CL I have how can I increase me score?  I use all of my cards monthly but keep small balances less than $500.

[MarineVietVet]

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@maryellis1981 wrote:

Thank you everyone for the responses!

The Discover card isn't my only card.  I have an AMEX, Citibank MC, and Chase Visa.  I think the total CL for all of those 3 cards is $20k - $25k.  Discover was the only credit card who dropped my CL following the shorte sale.

I would really prefer not to open any other accounts.  So given the current CL I have how can I increase me score?  I use all of my cards monthly but keep small balances less than $500.

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Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".