topic Re: Credit Line Question in Credit Cards

Credit Line Question

Anonymous — Mon, 05 Jun 2017 14:53:48 GMT

So I am in college and got my first card in Decebmer. It was the Discover it Chrome for students 500SL but got it to 1000 two months ago. I also got the capital one journey card two weeks ago for 300 Sl. I also got the Bank of America Cash Rewards the other day 500 SL. I know some creditors do automatic credit limit increases. Is there a way I can stop them from doing automatic CLI? Or would I have to ask to decrease it when the auto CLI? I don't need any more credit. 1.8K is plenty for a junoir in college and I wont want any more. I just want to garden with this limit untill i graduate college. Thank you for helping me get my credit journey going.

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 14:57:38 GMT

You can always ask for a CLD (credit limit decrease)! It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting. If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month. If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for. If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards. When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 15:05:52 GMT

@Anonymous wrote:
You can always ask for a CLD (credit limit decrease)! It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting. If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month. If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for. If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards. When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

Thank you ill check it out. I also have an excel sheet. I have all my bills listed on it, the due dates, when I clicked the pay button and when they got the payment. My landlord will report when I move in in august so that will help. I know BOFA is stingy and heard them close accounts because peolpe have too much credit. I plan to swtich to BOFA after school because Im starting to hate WF.

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 15:19:55 GMT

I understand that you are trying to limit your exposure to open credit lines to remain disciplined, but if you can manage higher limits they are definitely beneficial. The only time I recommend CLDs or keeping low limits is when a person cannot handle having a high amount of open credit (meaning, they impulse buy and over-spend).

It seems like you're disciplined enough to handle the higher limits, you're young but already keeping a budget and spreadsheet. I'd recommend letting the auto-CLIs go through to help with utilization if a balance shows on a statement, to help future applications (some banks like to see that you have a history of handling high limit cards before giving you a premium card - Chase is known for this), and to have in case of emergencies. I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

Best of luck with your credit journey!

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 15:26:18 GMT

@Anonymous wrote:
I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

This is so so so true. I lived on debit cards for the past 5 years of being in the FICO trash pile and more than once I had an issue while traveling -- not an emergency, but an opportunity. I couldn't take advantage of some of them because all my debit cards had a daily spend limit and the opportunity cost more than my daily spend limit so I had to pass. Had I had ONE credit card with a gigantic limit, I could have used it, taken advantage of the amazing offer, and then paid it in full from checking once it posted.

It's frustrating to think that my own bad management of debt made me miss out on some fantastic deals!

If you track spending discretely and manage your spreadsheet, I bet you can also manage high limits. Just pretend they're smaller ones, or live by the "don't go over XX% utilization" mantra that I do.

I won't spend the money if it means that credit card will ever report more than an 8% utilization. Right now I really want to book a vacation deal but I won't be able to pay that CC down to 8% before the statement closes on the 23rd, so I am patiently waiting for the 24th to roll around! If my credit limit was double where it is today, I'd book it right now.

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 17:19:47 GMT

@Anonymous wrote:
@Anonymous wrote:
I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

This is so so so true. I lived on debit cards for the past 5 years of being in the FICO trash pile and more than once I had an issue while traveling -- not an emergency, but an opportunity. I couldn't take advantage of some of them because all my debit cards had a daily spend limit and the opportunity cost more than my daily spend limit so I had to pass. Had I had ONE credit card with a gigantic limit, I could have used it, taken advantage of the amazing offer, and then paid it in full from checking once it posted.

It's frustrating to think that my own bad management of debt made me miss out on some fantastic deals!

If you track spending discretely and manage your spreadsheet, I bet you can also manage high limits. Just pretend they're smaller ones, or live by the "don't go over XX% utilization" mantra that I do.

I won't spend the money if it means that credit card will ever report more than an 8% utilization. Right now I really want to book a vacation deal but I won't be able to pay that CC down to 8% before the statement closes on the 23rd, so I am patiently waiting for the 24th to roll around! If my credit limit was double where it is today, I'd book it right now.

ABCD2199, Is there a way to add loans to your credit spread sheet?

Re: Credit Line Question

Anonymous — Mon, 05 Jun 2017 18:46:09 GMT

Sure thing! I am trying to figure out the best way to do that, but I will start something up today! Thanks for the idea.

Re: Credit Line Question

SouthJamaica — Mon, 05 Jun 2017 22:40:19 GMT

@Anonymous wrote:
You can always ask for a CLD (credit limit decrease)! It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting. If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month. If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for. If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards. When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

I don't think you should do anything like that. If they grow they grow. There's no law that says you have to use any of it.

Re: Credit Line Question

EAJuggalo — Tue, 06 Jun 2017 01:01:27 GMT

What is being with one of those big banks doing for you? Why don't you start a relationship with a good Credit Union? They generally get you much more for you money and will have much better interest rates for those big purchases.

Re: Credit Line Question

Schwartzinator — Tue, 06 Jun 2017 02:37:19 GMT

I entered college 3 years ago with just a debit card to make all of my purchases. At the time, it sounded good to only purchase what I could pay off that month but I had no understanding of what a credit score really was much less what went into it. As others have mentioned, the purpose of a large limit isn't necessarily meant to promote spending more money, but rather to pad your score when utilization is calculated. The fact that you recognize the temptation of a higher limit and are proactively looking for ways to keep your bank account(s) safe means you're definitely on the right track! I am personally hoping to graduate next May with scores all above 780 and credit lines totalling $50,000 not because I have any intention of running up that kind of balance but because it provides plenty of breathing room during monthly cycles.

Re: Credit Line Question

jamesdwi — Tue, 06 Jun 2017 13:56:36 GMT

@Anonymous wrote:
So I am in college and got my first card in Decebmer. It was the Discover it Chrome for students 500SL but got it to 1000 two months ago. I also got the capital one journey card two weeks ago for 300 Sl. I also got the Bank of America Cash Rewards the other day 500 SL. I know some creditors do automatic credit limit increases. Is there a way I can stop them from doing automatic CLI? Or would I have to ask to decrease it when the auto CLI? I don't need any more credit. 1.8K is plenty for a junoir in college and I wont want any more. I just want to garden with this limit untill i graduate college. Thank you for helping me get my credit journey going.

yes you can ask for your credit limit reduced. But relize when a lender gives you a credit limit, they don't expect you to use it all. For best FICO scoring, its best to let only 1-9% report on a single card. You are starting out, here is where you learn that just because you have a credit limit, its not a goal to max it out. Most lenders expect you to use 30% of your credit limit, so your 1000 limit card, they expect that you use less than $300 of it. They will allow you max it out, which is anything over 80%, But the underwriters at your lenders would much rather see you use no more than %30 percent. Learning to be responsible now, is a great start to your financial future.

Re: Credit Line Question

HeavenOhio — Tue, 06 Jun 2017 14:37:03 GMT

Yeah, below 30% (28.9% or below) is considered to be responsible. 8.9% or below is a step above that and optimizes scoring.

If you're concerned about over-spending, most cards offer an e-mail option for "spending threshold" or "approaching limit" or whatever, and they allow you to choose the amount that will trigger notification. Set the amount really low if you'd like. I think mine are in the ballpark of 15% of my limits.

Re: Credit Line Question

Anonymous — Tue, 06 Jun 2017 14:44:17 GMT

@EAJuggalo wrote:
What is being with one of those big banks doing for you? Why don't you start a relationship with a good Credit Union? They generally get you much more for you money and will have much better interest rates for those big purchases.

Generally the big banks have better rewards programs (both earning rates and redemption options). Although CUs are great for low APR cards. However, since I never carry a balance, that is irrelevant to me (and hopefully most people here).

That being said, establishing a relationship with a good CU can be helpful when looking for car/home/personal/student loans.

Re: Credit Line Question

Anonymous — Thu, 08 Jun 2017 15:41:31 GMT

I have heard bad things about BOA closing credit card accounts for many reasons and that scares me. Ik they love to do reviews. My income will decrease this year because I have been waiting a month on an outstate backround check from the state I go to school to start my summer job back home. So as you all know I have 3 Cards opened sense Dcember of 2016 and started my credit then. Discover is 1K, Cap one 300, and BOA is 500. So now my income will drop . SO i have 1.8K in credit to like 4-6K income but 10K in assets. My credit builder loan started to report yesterday at a balance of 506. So how do I not get tartgted by BOA? I plan to switch to them after I leave school. Because there is 3 inquires but four accounts can they see that its a secured credit builder loan? Im just woundering if BOA will see me as a risk with 4 new accounts from December- May I plan to have all these cards age together. The CB loan is to help show I can manage different types while im in college and save haha!. After the CB loan, I plan to put it in my IRA. Any advice is welcome and thank you for getting my credit journey started.

Re: Credit Line Question

Anonymous — Thu, 08 Jun 2017 15:52:36 GMT

@Anonymous wrote:
I have heard bad things about BOA closing credit card accounts for many reasons and that scares me. Ik they love to do reviews. My income will decrease this year because I have been waiting a month on an outstate backround check from the state I go to school to start my summer job back home. So as you all know I have 3 Cards opened sense Dcember of 2016 and started my credit then. Discover is 1K, Cap one 300, and BOA is 500. So now my income will drop . SO i have 1.8K in credit to like 4-6K income but 10K in assets. My credit builder loan started to report yesterday at a balance of 506. So how do I not get tartgted by BOA? I plan to switch to them after I leave school. Because there is 3 inquires but four accounts can they see that its a secured credit builder loan? Im just woundering if BOA will see me as a risk with 4 new accounts from December- May I plan to have all these cards age together. The CB loan is to help show I can manage different types while im in college and save haha!. After the CB loan, I plan to put it in my IRA. Any advice is welcome and thank you for getting my credit journey started.

Where did you hear bad things about BOA closing accounts for too much credit? If anything all I been hearing is the opposite how BOA grows quick and gives higher limits to people who started with low limits, basically extending them more credit with growth of the account lol.

Re: Credit Line Question

Anonymous — Thu, 08 Jun 2017 17:56:51 GMT

OP you are over thinking it.(while good to think about your credit and being proactive...) Just keep up with those cards and let them mature. Even with an income drop dont worry as long as you dont over overspend. You wont be at that income forever.

I would of advised against that installment loan just for your credit report... It is not necessary. Your score would have grown just fine and in your future you could of obtained a car loan or the like.

Also ALL banks/cards have bad things about them, some just worse than others and for every bad there is usually 1000's of goods. No financial institution is perfect.