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Established Contributor
Cadillac-XTS
Posts: 1,837
Registered: ‎08-20-2012
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Re: Capital One Increase

Congrats

Regular Contributor
localuser
Posts: 140
Registered: ‎09-07-2012
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Re: Capital One Increase


colnagoflight wrote:

Howdy, my suggestion is to add the deposit money just to increase your line of credit.  this makes the utilization percentages easier to manage.  Then use the card but pay it off as soon as the "charges" post to the account.  Example:  08-07-2012 I charged $932 to the account.  on 08-10-2012 I paid $800 via mobile banking.  this way I keep a rolling utilization below 19%.  if you use your card a lot and pay it quickly -- even if you have a low balance -- they will increase your unsecured line of credit approximately two (2) times per year.  from my research, every 5-6 months they review an account.  so when my account had only a $200 line of credit, i paid it 6 times that month in full .... my last months spending was in excess of $3,000 but except for this month, i've kept it below 9% utilization.   

 

Anyway, just use it alot and pay it off minus a $50 balance ... so they have "something" to report to the credit bureau a minimum of one week before the statement date.  

 

 

 

 


Can you please explain what you mean.  "08-10-2012 I paid $800 via mobile banking.  this way I keep a rolling utilization below 19%" and "Anyway, just use it alot and pay it off minus a $50 balance"  Thanks in advacne

Cap1Secured $500 | Chase Slate $700 | Amazon Store $3000 | Discover IT $5000 | Lowe's $5000 | AmEx BCE $13500
January 2014 (myFICOs): Equifax 675 ^ TransUnion 661 Experian 723 ^
Goal: Never miss a payment | Last App: 11/21/2013
Established Contributor
Lasardo
Posts: 738
Registered: ‎04-26-2012
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Re: Capital One Increase

Cap1 gave me a $100 CLI and never asked!
CS 728- 01/13 from 554-12/11
Goal: 800
Established Member
colnagoflight
Posts: 22
Registered: ‎06-15-2012
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Re: Capital One Increase

IF Capital One gave you an increase and never asks -- you are heading the right direction.  Their has to be a formula to determine who gets $50, $100, or $300 credit line increases.  The real question is what is that formula that they use?

Established Member
colnagoflight
Posts: 22
Registered: ‎06-15-2012
0

Re: Capital One Increase

Can you please explain what you mean.  "08-10-2012 I paid $800 via mobile banking.  this way I keep a rolling utilization below 19%" and "Anyway, just use it alot and pay it off minus a $50 balance"  Thanks in advacne

 

the question above about mobile banking is just making a mobile payment from my cellular device.  I have an iPhone so I just use the capital one app and request a payment to be made from my checking account. 

 

Now, regarding the utilization issue, you have to follow the money to determine "who benefits."  Think of it like this, you go out to dinner.  who "benefits" from the purchase of your dinner?  The restaurant obviously, the waiter or waitress, but also the food companies that make the products the restaurant sells.  this is the same analogy with credit.   so back to the banking analogy, when you make a purchase let's say Target for example.  who benefits?  Target does first ... they sold the product, the employee who checked you out (their benefit is a job), but so does the product manufacturer that you bought it from along with the banks.  there is the credit card merchant who benefits with their small percentage fee for processing the credit transaction.  FICO, on the way back end, benefits because a card holder who never uses their card has nothing to analyze.  meaning no credit usage to analyze; however, IF you use your card, they have something to analyze.   so, to answer the utilization question, let's say you have a $1,000 line of credit but you charge $950.  that means you are almost maxed out on your credit line.  since you charged, FICO gets to "analyze" your credit usage behavior.  from their research, 1/3 of the population pays their card in full but 2/3 of the population will finance some portion of the balance.  They get the honor of guessing what "type" of card user you are. 

 

Formula 1:

 

card balance - $950

--------------------------- = 95% utilization

card limit -      $1000

 

According to FICO, statistically speaking, you are a bad user because you maxed out your card.  BUT, where they are wrong is IF I pay the balance in full at the end of the month I am a good user according to the bank who only cares that I charge and pay.  If I have charged, they make their transaction percentage and if I pay then they have no risk because i paid it off at the end of the month. 

 

However, FICO thinks you are bad jus the fact that you charged over the 19% utilization

 

card balance - $190

--------------------------- = 19% utilization

card limit -      $1000

 

the problem with FICO, is that they need to "wait" to see IF I pay balance in full, I can handle the limit.  IF I finance, depending on how much I pay, demonstrates IF I can or can not handle the limit. 

 

Example:

 

card balance - $950

----------------------------- = 95% utilization                

card limit        - $1000

 

              >> Month 1.  Balance is $950 and I only pay $50 which makes remaining balance $900.

 

                     new card balance $900

                     -------------------------------- = 90% utilization

                     card limit                 $1000

 

              >> Month 2.  Balance is $900 and I only pay $50 which makes remaining balance $850.

 

                     new card balance $850

                     -------------------------------- = 85% utilization

                     card limit                 $1000

 

(*) these examples don't assume interest .. they are for illustration of how not paying in full hurts your credit limit. 

 

What this tells them is that you are a minimum payment person, they will make lots of money at 21% interest if you only make minimum payments.  The question is how long will you make these payments before you file for bankruptcy?  That's called risk. 

 


WORK AROUND SOLUTION

 

The work around solution is to beat them at their own game.  Here's what each party likes (assuming I am correct):

 

who benefits?  Line of credit:  $30,000 / monthly usage is $3,000 and you pay off every month.

--> bank likes $3,000 monthly charges and history of paying off in full.  No risk and $3000 x merchant% means money to them [ no risk customer ]

 

--> FICO -- credit line $30,000 x 10% card usage = controlled spending.  They get paid for their analysis that you can handle the credit limit.  No idea what they make but it must be good. 

 

-----------------

 

Here's where FICO's analysis is wrong

 

same $30,000 credit limit with $15,000 monthly usage but paid in full at the end of the month.  customer travels for work and gets reimbursed.

 

-- bank says 15,000 x merchant fee = lots of $ for them.  history:  pays in full every month.  mild risk because of high balance but safe risk because history paid in full every month.

 

-- FICO $30,000 credit limit and $15,000 charges mean $15K / $30K = 50% utilization -- FICO says bad user.  even though they pay the account in full every month FICO thinks they are a bad user because they go over 30% utilization percentage. 

 

SUMMARY:

 

RICH people want the higher end card with a higher-end credit limit so they don't damage their credit and have a card that has "image" ... like owing a BMW .. it has status.   and they get lots of perks from having the better cards.  Like the American Express Centurion, they are required to charge a minimum of $250,000 to the card every year and pay in full every month.  For the rich, one card, for the poor, multiple cards.  We need the credit the rich don't. 

 

WORK AROUND:

 

I monitor my credit both before and after ... basically twice a month and there are certain patterns that I have observed.  to beat them at their own game, because always is a loophole built in for the rich, is to use that same loophole they built for themselves.  My loophole is to pay the account off before the balance is due -- basically to be on the same side -- one week before the payment is due but leave $50 remaining balance.  so what is $392 / $3000?

 

card balance -     $392

-------------------------------- = 13.06% utilization

card credit limit - $3000

 

the trick is to show them you can handle the credit line by charging at the level of credit limit you want and paying (which makes the bank happy) and paying the balance/statement before the statement is due (makes FICO happy) ... you have a utilization % they can "sell" to others by predicting you are a good user.  Now this pattern so speak must be maintained for at least 6 months if my research is correct.  one month is not enough to establish a pattern.  that's why many credit card companies want to see a 12-18 month history ... it establishes a track record. 

 

====

 

Actual analysis of my usage last month:

 

previous balance:  $617.13

payments and credits:  $2878.99

fees and interest:   $0.00

transactions:  $4056.65

new balance:  $1794.79

credit limit:  $3000

 

any guesses as to what my utilization is? 

 

balance:  $1794.79

----------------------------- = 59.82%

credit limit:  $3000.00

 

that looks bad to FICO so I am sure my score will go down.  but the bank's not worried because they have already seen payments made on this account plus transactions for this month.  We had to have the timing chain fixed on the card and my deposit money came into 2 days late.  once it arrived, i made an advanced payment of $1100.  then on payday, another $900 for the existing charges that were were set aside in savings.  once all payments and credits have been deposited, my balance will show $192/$3000 credit limit.   what the banks see is that i have a bunch of charges, similar to last month but with advanced payments of the following:

 

PAYMENTS ALREADY MADE.

$200

$200

$1100

$180

$600

$700

$900

 

CREDITS FOR RETURNED MERCHANDISE

$116.87

$19.00

 

I am presently at $392 / $3000 and once the final $200 credit is made, it will be $192 / $3000 which mean my utilization is 6.4%. 

 

 

KEEP IT SIMPLE.

 

instead of writing that check every month, which you would normally pay, just put everything on the charge account but pay it 3 days later so you aren't tempted to spend the money elsewhere.  make sure you leave $50 to $100 a month on your statement so they have a balance to send you.  The $50 a month is what I call "floating balance" .... so $50 / $3000 credit limit means my utilization is low which menas FICO will give me a thumbs up and credit score goes up and yet i still get to use the card between $2,000 to $3,000 a month instead of my Debit card which has no liability protection AND keep EVERY RECEIPT and check it daily.  somebody skims your card i know about it immediately ... i check balances every day and audit against my receipts every pay day. 

 

Does this all point you the right direction .... ? 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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