To CLI or NOT CLI?

[FrugalRican]

That, my friends, is the question!

Do you CLI just because you can or do you CLI because you truly need it?

One of the first pieces of advice I received from people when I got my AMEX BCE was to use it wisely, and then request a CLI in 61 days, but after going over my total CL's, it seems almost pointless to get a CLI when I have a line of 9.5K already. Other than random purchases, I don't think I'll ever put on more than 2K a month.

Technically speaking, wouldn't having TOO much credit create the possibility of hurting my chances of seeing what that sweet spot might be for my credit scores?

Assume, my case, my total CL's are about 32.2K. If my sweet spot happened to be 8%, then that is $2576 a month I'd have to show on my statement.

Unfortunately, I'd never spend that month, so I might be costing myself a better FICO score (theoretically speaking, of course), just because I wanted an increase?

So say 61 days go by and I get a 2X increase on just that one card.

My new total is $41700. If my sweet spot still remains at 8%, I just raised how much I'd have to spend in a month to meet that for my best FICO score (again, theoretically speaking, since YMMV).

Sorry if this seems confusing or if it is even incorrect. Criticism is welcome of my calculations!

So it got me to thinking, are there people who decide that it's just not worth it to CLI at all and just let the auto-luv hit, or do people just always request a CLI just because they can? As far as I can tell, I'd probably let any requested CLI's pass me by and never do so. But, strategies are completely individualistic and apply to every one differently.

Chime in, and let me know!

[Open123]

In my view, your ideal CL is whatever level you need to comfortably have your untility at or below the 10% line of demarcation.  Once you exceed 10%, there is a drop in your scores.  Below 10%, the deleterious effects on Fico are minimal.

Having too much credit is bad too.  For instance, if your credit line is so high, it will lead to your being declined by some issuers for having "enough available credit," eventhough your scores might be very high.

So, in the end, I think the prudent course is to have a high enough limit to maintain the 10% utility mark, whatever that might be for you.  For me, once my limits exceeds what I need for the 10%, I select certain cards (I really don't care too much about, or I used just for a bonus/perk), and request a CLD to ensure I can still apply and be approved for future credit cards that fit my needs.

Also, all things being equal, with many issuers (such as AmEx), if and when you need it--say for a trip abroad--they'll very likely raise it to whatever you instantly.

Edit - PS -  For example, let's say I app'ed for the BCE just to buy groceries exclusively.  AmEx gives me a CL of $15k.  I'd ask them to either lower it to $3k, or give me the option to reallocate to another card where I might actually spend on, say the SPG.  I'm not even sure I spend $3k per year on groceries, which makes the $15k limit a complete waste.

[p-]

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@FrugalRican wrote:

That, my friends, is the question!

Do you CLI just because you can or do you CLI because you truly need it?

Chime in, and let me know!

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For me, Credit Limit Increase Time is every six months.  I list the last CLI Time on my spreadsheet and call to request another when six months hits.  I want to keep my utilization around 5-9%, but right now in order to do that I have to keep PIF before statement dates and chase the cut dates around the calendar.  My CL goal is to have my total credit line be high enough that my max monthly spending is 5-9% of the total credit line.  That way I can pay monthly instead of chasing the calendar.  Once I reach that I will stop asking for increases.  Maybe.

To be honest, I look forward to Credit Limit Increase Timing.  CLI Time satisfies that itch to app, and helps me put off asking for other credit I don't need.  CLI Time also helps me see progress in my rebuilding, beyond just the score.  

As far as I'm concerned, utilization calculation means the credit you really need is about ten times what you will ever actually use.  So I say request a Credit Limit Increase every chance you get, and be happy while you're doing it.

[learnin113]

I suspect this thread will bring up the PIF/vs balance carriers argument all over again.  If you're a PIF kinda person, then CLIs may not be a big deal.  If you're the kinda person that tend to carry a balance (like myself), then CLI's will be your obsession since it may save your score from taking a plunge from time to time.  And of course there are some of us who are obsessed with credit and just like to see how much we can get...kinda like a game.

[daveg38]

I have always been educated to never ask for more than you really need in all facets of life, including credit.  If people truly believe they have the need for $80,000 in credit cards and plan to use/pay for the credit, by all means grab your share!  However, no matter the ceiling that I am given for my credit, I never spend more than I cannot fully pay back on a moment's notice.

For example, I chomped up $3200 last month on my USAA.  Paid off $2900 nearly 2 1/2 weeks later and the rest will be taken care of this week.  As I put in another post, I use my Cappy 1 card to the max 10 seconds after my statement posts and gets sent to CB's with a 0 balance.  Then I pay it off a few weeks later.

I think you should CLI low limit cards you know you can max and pay simply to get some cushion.  Bigger line cards I'd let ACLI on their own.

[FrugalRican]

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@p- wrote:

As far as I'm concerned, utilization calculation means the credit you really need is about ten times what you will ever actually use.  So I say request a Credit Limit Increase every chance you get, and be happy while you're doing it.

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I'm intrigued by the statement about the "10X", is that something you learned on your own or that you heard somewhere else?

[FrugalRican]

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@Open123 wrote:

In my view, your ideal CL is whatever level you need to comfortably have your untility at or below the 10% line of demarcation.  Once you exceed 10%, there is a drop in your scores.  Below 10%, the deleterious effects on Fico are minimal.

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So essentially, it pretty much makes very little to no difference whether I am at 5% or 6% so long as I am under 10% and over .5%?

If so, I'd just go for CLI's because the 1% number would be much easier to reach, even with a 40K+ line ($400).

[LS2982]

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@FrugalRican wrote:

That, my friends, is the question!

Do you CLI just because you can or do you CLI because you truly need it?

One of the first pieces of advice I received from people when I got my AMEX BCE was to use it wisely, and then request a CLI in 61 days, but after going over my total CL's, it seems almost pointless to get a CLI when I have a line of 9.5K already. Other than random purchases, I don't think I'll ever put on more than 2K a month.

Technically speaking, wouldn't having TOO much credit create the possibility of hurting my chances of seeing what that sweet spot might be for my credit scores?

Assume, my case, my total CL's are about 32.2K. If my sweet spot happened to be 8%, then that is $2576 a month I'd have to show on my statement.

Unfortunately, I'd never spend that month, so I might be costing myself a better FICO score (theoretically speaking, of course), just because I wanted an increase?

So say 61 days go by and I get a 2X increase on just that one card.

My new total is $41700. If my sweet spot still remains at 8%, I just raised how much I'd have to spend in a month to meet that for my best FICO score (again, theoretically speaking, since YMMV).

Sorry if this seems confusing or if it is even incorrect. Criticism is welcome of my calculations!

So it got me to thinking, are there people who decide that it's just not worth it to CLI at all and just let the auto-luv hit, or do people just always request a CLI just because they can? As far as I can tell, I'd probably let any requested CLI's pass me by and never do so. But, strategies are completely individualistic and apply to every one differently.

Chime in, and let me know!

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I'm currently asking for CLI's to get me out of wanting to app and staying in the garden!! It helps my overall util. and lets me spend a little more on my cards without breaking 50% of the limits.

[Anonymous]

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@Open123 wrote:

In my view, your ideal CL is whatever level you need to comfortably have your untility at or below the 10% line of demarcation.  Once you exceed 10%, there is a drop in your scores.  Below 10%, the deleterious effects on Fico are minimal.

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+1. I might add that its best for each card to be < 10% util since FICO counts overall credit usage as well as usage on individual cards in their formula. So a particular heavy used card might benefit from a CLI or reallocation of CLs to achieve this.

[FrugalRican]

I think I might actually ask for a CLI once the 61 days come along.

Reasoning: My MBNA card is now a property of Bank of America. And after all the closures of cards I've been seeing coming from BoA, I think asking for a CLI on the AMEX BCE would pad my utility enough. If I lost my 15.9K balance, it'd jolt my utility overall by a huge amount.

So I think that's another factor to be considered.