Why should I care about credit line increases?

[Anonymous]

I feel like a lot of posters weigh credit lines on par with card benefits.  I honestly could care less if all of my cards were set at $1000.  Am I missing something here? 

[takeshi74]

You might be missing revolving utilization and its impact on scoring and risk assessment.  Falls under Amounts Owed below:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Some certainly are just after them for bragging rights or addiction to approvals and increases.  Some need the spend capability.  Don't just assume that your spend is universal.  I regularly have need for more than just $1,000.  I'm currently going through a remodel that requires much, much more.

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@Anonymous wrote:

I honestly could care less if all of my cards were set at $1000. 

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Could or couldn't?  Meanings are opposite despite how often one of them is misused.

[Anonymous]

Yes, you are missing the point.  You should absolutely care about CLI as it affects your utilization and how your score is calculated.  If for example, you have 3 cards all with $1,000 limits and have to make a purchase in the amount of $3,000 then it will have to be splited on the 3 cards and will max all of them out.  The increases are also good to have in case of an emergency.

So CLI are very important.  

[Anonymous]

Yes and no. It all depends on your situation.

- Will you be looking to get additional credit cards

- Will you be looking to finance a car

- Will you be looking to get a mortgage

- How much do you charge a month

- What is your utilization

When each of your cards report each month, they report the balance at that time. When they report the utilization, that can effect your overall score. If they report a high balance, it can negatively effect it.

[Anonymous]

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@Anonymous wrote:

Yes and no. It all depends on your situation.

- Will you be looking to get additional credit cards

- Will you be looking to finance a car

- Will you be looking to get a mortgage

- How much do you charge a month

- What is your utilization

When each of your cards report each month, they report the balance at that time. When they report the utilization, that can effect your overall score. If they report a high balance, it can negatively effect it.

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Scoring is not the only reason for wanting higher limits.  If you are the type of person to carry a balance, a creditor will look unfavorably upon you carrying a $1900 balance on a $2K limit much more so than a $1900 balance in a $10K limit.  High utilization is one of the biggest contributors to AA by creditors so even without an effect on scoring there are reasons to want higher limits.

[Anonymous]

It depends a lot on where you are.  Like you, OP, I frankly have never been concerned about CLI, and I still am not.  But I'm at around $500k total C/L and running typically (unless I'm exploiting some 0% offer) around $5k in balances (PIF every month, of course).  So my ratio is at about 1%.  If I got $100k in CLI, my ratio would still be.about 1%.  If I used CLI's to double my C/L from $500k to $1M, my ratio (rounded) would plummet all the way to ... 1%.  

Now it's true that some lenders consider ratio for individual cards.  And if you are planning to do some significant spending on a card that means you'll be stretching that limit, then there might be some logic to getting a CLI on that card.  Then again, last year I ran up my Barclay Arrival+ to within 90% of its $12.5k C/L within a couple months of having the card and maintained that balance through the end of the 12 month 0% period, and didn't suffer any ill effects.  

And you could argue that way back when when I had only $10k in total C/L, I should have paid more attention to CLI's.  And maybe I would have gotten to $500k sooner.

If I see an opportunity to do an easy SP CLI, I'll go for it.  But otherwise, I don't see the value.  If I'm going to incur a hard hit and/or go to the trouble of apping for something, I'd rather app for a new card that gives me $400-$500 in signup bonus.

Chris.

[thom02099]

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@Anonymous wrote:

It depends a lot on where you are.  This.  Like you, OP, I frankly have never been concerned about CLI, and I still am not.  But I'm at around $500k total C/L and running typically (unless I'm exploiting some 0% offer) around $5k in balances (PIF every month, of course).  So my ratio is at about 1%.  If I got $100k in CLI, my ratio would still be.about 1%.  If I used CLI's to double my C/L from $500k to $1M, my ratio (rounded) would plummet all the way to ... 1%.  

Now it's true that some lenders consider ratio for individual cards.  And if you are planning to do some significant spending on a card that means you'll be stretching that limit, then there might be some logic to getting a CLI on that card.  Then again, last year I ran up my Barclay Arrival+ to within 90% of its $12.5k C/L within a couple months of having the card and maintained that balance through the end of the 12 month 0% period, and didn't suffer any ill effects.  

And you could argue that way back when when I had only $10k in total C/L, I should have paid more attention to CLI's.  And maybe I would have gotten to $500k sooner.

If I see an opportunity to do an easy SP CLI, I'll go for it.  But otherwise, I don't see the value.  If I'm going to incur a hard hit and/or go to the trouble of apping for something, I'd rather app for a new card that gives me $400-$500 in signup bonus. And This.

Chris.

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Some good answers given in this thread. 

Much depends on where you are in your credit journey.  As a recent retiree, my perspective will be different from others, particularly "young uns" and those growing their credit file. If I were beginning or at some middle point, I'd be concerned about CLI for the reason cited by others above. But I'm not.  I'm on the end portion of my credit journey, so in my particular point in life, I'm at that place where additional CLI don't really mean much to me.  But that's for my particular situation.  Yours and other posters are different, so the needs will be different, and the answers above address some of those needs. 

Even though I don't pursue CLI, I still get them.  I get automatic CLI occasionally, and I'm certainly not going to object.  I would be much more inclined to apply for a new card as Chris suggested above, and that's what I did with the last card I got, the Diners Club card.  They were insanely good to me for CL, so I'm sure as heck not gonna stir things up and ask for more. 

Yes, there is a point where one should say "I'm satisfied" and let your credit file grow naturally. Each individual should assess and determine that point.

Credit is not a competitive sport!

[Anonymous]

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@thom02099 wrote:

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@Anonymous wrote:

It depends a lot on where you are.  This.  Like you, OP, I frankly have never been concerned about CLI, and I still am not.  But I'm at around $500k total C/L and running typically (unless I'm exploiting some 0% offer) around $5k in balances (PIF every month, of course).  So my ratio is at about 1%.  If I got $100k in CLI, my ratio would still be.about 1%.  If I used CLI's to double my C/L from $500k to $1M, my ratio (rounded) would plummet all the way to ... 1%.  

Now it's true that some lenders consider ratio for individual cards.  And if you are planning to do some significant spending on a card that means you'll be stretching that limit, then there might be some logic to getting a CLI on that card.  Then again, last year I ran up my Barclay Arrival+ to within 90% of its $12.5k C/L within a couple months of having the card and maintained that balance through the end of the 12 month 0% period, and didn't suffer any ill effects.  

And you could argue that way back when when I had only $10k in total C/L, I should have paid more attention to CLI's.  And maybe I would have gotten to $500k sooner.

If I see an opportunity to do an easy SP CLI, I'll go for it.  But otherwise, I don't see the value.  If I'm going to incur a hard hit and/or go to the trouble of apping for something, I'd rather app for a new card that gives me $400-$500 in signup bonus. And This.

Chris.

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Some good answers given in this thread. 

Much depends on where you are in your credit journey.  As a recent retiree, my perspective will be different from others, particularly "young uns" and those growing their credit file. If I were beginning or at some middle point, I'd be concerned about CLI for the reason cited by others above. But I'm not.  I'm on the end portion of my credit journey, so in my particular point in life, I'm at that place where additional CLI don't really mean much to me.  But that's for my particular situation.  Yours and other posters are different, so the needs will be different, and the answers above address some of those needs. 

Even though I don't pursue CLI, I still get them.  I get automatic CLI occasionally, and I'm certainly not going to object.  I would be much more inclined to apply for a new card as Chris suggested above, and that's what I did with the last card I got, the Diners Club card.  They were insanely good to me for CL, so I'm sure as heck not gonna stir things up and ask for more. 

Yes, there is a point where one should say "I'm satisfied" and let your credit file grow naturally. Each individual should assess and determine that point.

Credit is not a competitive sport!

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This!  It's all in what you are looking for and where you are in your own journey.  I personally like high limits for utilization even though I would not be happy if I charged up that much credit!  

[longtimelurker]

I agree with all the "It depends!"   It does appear to me to be stressed  too much on this board, but maybe that's because many posters do fall into the "Yes" of the "It depends" categories.

But, IMO, it sort of breaks down into a few cases:

1) You have a card you use a lot and it has a low CL.   You find yourself paying several times a month to keep under the CL, and maybe also worry that it reports too bigger a percentage if you don't get the last payment in on time.   Then yes, CLI is a good thing.

2) Utilization.   To me, this is the way overstressed issue here.  

   a)  If you can PIF, then you can adjust utilization to whatever you want.   Having enough CL just means you don't have to worry about this too much, but it doesn't need to get in your way quite as much as 1)

  b) If you can't pay in full, and utilization is an issue then maybe CLI is worthwhile

3) Bragging rights.  For those that value that.

What  does confuse me is when people pay AFs purely for utilization reasons.  My fave example of this is those that got both types of DC cards.  The Elite has all the benefits and more of the lower-tier card (unlike say Amex, where cards might have different reward structures) but are wiling to pay $95 just for the CL.   Not sure how people view the $95 as being justified.

[Ghoshida]

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@longtimelurker wrote:

I agree with all the "It depends!"   It does appear to me to be stressed  too much on this board, but maybe that's because many posters do fall into the "Yes" of the "It depends" categories.

But, IMO, it sort of breaks down into a few cases:

1) You have a card you use a lot and it has a low CL.   You find yourself paying several times a month to keep under the CL, and maybe also worry that it reports too bigger a percentage if you don't get the last payment in on time.   Then yes, CLI is a good thing.

2) Utilization.   To me, this is the way overstressed issue here.  

   a)  If you can PIF, then you can adjust utilization to whatever you want.   Having enough CL just means you don't have to worry about this too much, but it doesn't need to get in your way quite as much as 1)

  b) If you can't pay in full, and utilization is an issue then maybe CLI is worthwhile

3) Bragging rights.  For those that value that.

What  does confuse me is when people pay AFs purely for utilization reasons.  My fave example of this is those that got both types of DC cards.  The Elite has all the benefits and more of the lower-tier card (unlike say Amex, where cards might have different reward structures) but are wiling to pay $95 just for the CL.   Not sure how people view the $95 as being justified.

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Also, aren't both of them hiddel TLs? (I might be wrong here, I have neither.) What's the point of having two hidden TLs, especially when the bigger AF one surpasses the smaller one in all respect? 

To me, higher CLs help me in 3 ways:

(1) I don't need to micromanage my utilization

(2) I can buy a big-ticket item in the card that is best suited for that category, to get the best rewards. 

Example: I have a Citi Dividend. Its most useful 5% category this year is Airfare (Jul-Sep). The max cashback I could earn in a year is $300; I plan to exhaust that in the third quarter; i.e. buy $6,000 worth of tickets. Between SO and me, we'll find good use for the tickets (hopefully). My limit is $4,500. If I don't send in payments before statement cut (which I generally don't like doing a lot), each of my statements will report close to 50% utilization. Right now, I could really do with some CLI, and for all the legit reasons.