To CLI or NOT CLI?

[p-]

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@FrugalRican wrote:

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

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To be honest, I made it up.  But it's logical.  Here's an example;  My wife uses my Chase Freedom as her expense card for work.  Even though she is reimbursed twice a month, and pays immediately when the money is received, it seems to always have a statement balance up to 1200 dollars.  Unfortunately, the credit limit is only 5,000, so it is often at 24% utilization.

If I want to optimize my utilization when I apply for credit, I have to plan ahead and pay off the card with personal money before the statement cuts, so I can show a lower utilization.  If I can get them to raise the limit to 13,500 it will always show a utilization percentage below 9%.

Unfortunately, my largest CL is still only 6k, and it's an Amex, which doesn't work for her.  Many of the local vendors she uses don't take it.  Worse still, Chase hits me for a hard inquiry if I request a CLI.

The same principal applies to my personal spending card.  I end up switching between multiple cards to make sure they all show 0 at statement time. Once I get a CL 10x my monthly spending, and the expense card up to 13,500, I should be in good shape and not have to chase statement dates around the calendar with multiple payments anymore.  Then, I'll have to find another way to scratch that itch.

[FrugalRican]

Gotcha, thank you for explaining that.

Makes perfect sense.

[p-]

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@FrugalRican wrote:

Gotcha, thank you for explaining that.

Makes perfect sense.

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Anytime - it sounded good in my head, anyway.  Of course when I explain to my wife why we need 20k in credit lines it might not go over so well.

[bichonmom]

That to me is what's so crazy about credit. Since learning about the 9% utli here and seeing myself how my FICO dropped when a balance reported (even 50% util), it showed me that I *need* a  higher CL -- not because I'm going to actually charge that much, but because of how the FICO system is set up.

With my Navy card, I have to pay before the stmt cuts.Last month, I missed it because of the weekend and my score dropped 24 pts. If I had a higher CL, it wouldn't have dropped, and I wouldn't have to pay before the stmt cuts every month to prevent the FICO drop.

The system seems really off to me. I mean, what's the point of having a CC if you have to pay them BEFORE the statement cuts (which I had never even heard of before reading here)? I think there ought to be a difference in scoring between using and paying each month vs. carrying a balance, but it appears FICO just isn't set up that way.

[FrugalRican]

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@bichonmom wrote:

That to me is what's so crazy about credit. Since learning about the 9% utli here and seeing myself how my FICO dropped when a balance reported (even 50% util), it showed me that I *need* a  higher CL -- not because I'm going to actually charge that much, but because of how the FICO system is set up.

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It's what drives me nuts as well.

Back in Feb 1st, my utilization was at 27%.

I apply for two credit cards, and voila, I'm at 14%. I didn't actually DO anything, I just got more credit, and all of a sudden, I'm a lot more attractive according to FICO scores and lower risk. I didn't pay anything, I didn't do anything special, other than fill out two apps, and there you go, lower utilization, cut in almost half within the course of a month.

I had a total CL of 17300. I know I'll NEVER use the full 17300, but the system doesn't know that.

So, solution, just go out and apply for more credit! It's all just a game.

[p-]

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@FrugalRican wrote:

...... It's all just a game.

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Pretty much...  It's all about categoric risks.  The only logic is statistical.  If they know that someone is x times more likely to default if they have a higher utilization percentage, then that particular group is considered a higher risk.  Including you , even if you would never default.  The system is not meant to be fair to anyone, except credit issuers.  So if your file's charictaristics match a group of higher risk borrowers, they would rather play it safe than loan to you.

Luckily we've all found the keys here to unlocking the statistics and getting more out of our own credit.  Sure it's a game, just like everything else in life.  But you and I and everyone here have chosen to learn the rules and make the system work for us, instead of being compliant victims.

As Mister Sheen would say: "Winning!!"