topic Re: Why such high CL's? and more questions... in Credit Cards

Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:17:22 GMT

Hello,

New here and have spent the past year slowly rebuilding my credit. After a lot of googling for information, I always wind up back here as you all are such a wealth of information.

In my 20's I abused credit, was very irresponsible, filed BK and divorced. Now in my 50's, for the first time since my divorce, I now have credit cards, but low balances, which help me manage low expenditures, but these low balances also give me small LTV ratio's, which are keeping my scores down (I'm assuming, I haven't pulled my fico's out lately, just using credit karma which i know is not totally accurate).

Question 1: In reading the forums here, it seems the goal is to have extremely high CL's...i'm wondering why, if its so important to keep low balances, why do we want five digit cl's? other than the fact that i'm finding obtaining credit my new addiction, we are working towards decreasing debt so why increase credit.?..

Question 2: In the next few months I plan to close my Credit One account. I've read in the past closing accounts hurts your score, is this true? To what extent and for how long?

Question 3: When I reach a 700 score I plan to apply for another card, an upgrade. My siggy should show what I have. I've banked with Chase forever, and would love a Chase Freedom, or a CapVenture, travel would be nice, rewards are great but I just upgraded my CapOneP to QS yesterday...

unless anyone has suggestions on what would be beneficial to my wallet. I have 2 derogs which will be falling off in a couple months, one loan that just started, no lates, just all new credit within the year.

Thanks for all your help, I really love this forum

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:23:18 GMT

Simple answer to #1 is utilization. Every increase to credit limit lowers your existing utilization. Say you carry a balance of $100 on a $1000 limit card which puts you at 10% utilization. A credit line increase to 5k would drastically decrease your percentage of available credit used without having to pay down balances further

Re: Why such high CL's? and more questions...

fltireguy — Sun, 03 Sep 2017 18:26:15 GMT

Why the high CL's ? That's a good question
I think it's a personal thing, well, at least in my case it is. I've had crappy credit pretty much all of my life. Before March 2016, at 50 years old, my highest CL ever was $1800 on a partially secured CapOne card. I set a goal, after reading posts on here for months- the goal was to have a high enough CL on a card to buy a new car with. Not that I ever would, or that a dealer would let me. But that was my goal. It took me a 15 months, and lots of hard work, but I went from a 535 TU in 11/2015 to my 757 that I have today. And, I went from $1800 in CL (excluding my car loan), to just north of $200k, with my highest CL being $23000 with NFCU, followed by $15k at PenFed. I finally got in with Chase, BofA, and other prime banks, as well as Amex. I did file BK years ago, but never burned any lenders thankfully

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:28:57 GMT

@Anonymous wrote:
Simple answer to #1 is utilization. Every increase to credit limit lowers your existing utilization. Say you carry a balance of $100 on a $1000 limit card which puts you at 10% utilization. A credit line increase to 5k would drastically decrease your percentage of available credit used without having to pay down balances further

Ok, that's what I figured, thank you so much SlightlyRemoved

Re: Why such high CL's? and more questions...

fltireguy — Sun, 03 Sep 2017 18:29:00 GMT

I should also add that, from 2002-2015, I had NO credit cards at all. One day, while on vacation, I went to pick up my rental car with my GF. Well, that particular location didn't take debit cards (and I had well over $15k in the bank). My gf knew that i didn't have any cards, and that I was a cash person. It was SO embarrassing when I had o have her put it on her Visa.... that was the beginning of the turning point

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:32:44 GMT

But I'll also freely admit for me at least, a high limit is very much an addiction & sense of pride. It makes me feel good about myself to know someone has deemed me worthy & trusted enough to be given a 5 digit limit.

As for applying for a new card, I would suggest looking at your monthly spending and use that to compare cashback/travel cards in order to determine where you can get the most benefit from your heaviest regular spending. As far as travel cards go I am enjoying the chase sapphire preferred that I just picked up as part of last month's 4 card spree (Amex BCE, CSP, Citi Costco, discoverIT. scores in 660-680,3 recently paid medical baddies).

Welcome to the forum, you'll be amazed at how much you can improve based on what you learn here

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:35:20 GMT

wow, fltireguy, I am highly impressed. obtaining credit after so long, I actually feel like a person again, it's such a strange sensation. each time i've received approval, even with OpenSky secured card, I felt that I finally came back to humanity. So now my new goal is to get my score higher, obtain higher CL's, and obtain a big-girl card.

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:39:59 GMT

@fltireguy wrote:
I should also add that, from 2002-2015, I had NO credit cards at all. One day, while on vacation, I went to pick up my rental car with my GF. Well, that particular location didn't take debit cards (and I had well over $15k in the bank). My gf knew that i didn't have any cards, and that I was a cash person. It was SO embarrassing when I had o have her put it on her Visa.... that was the beginning of the turning point

Been there done that for sure! Been married since 2012 & together since 2008 but until I finally got myself dedicated to repairing my credit & netting 4 prime cards this year, we've always only put her name on any accounts or loans for fear of my credit tanking our chances of approval or rates. After repairing for years & becoming a father it's become a real source of pride & sense of accomplishment to know we can open joint accounts/loans and I don't have to have a panic attack about ruining it. When I got approved for discover last month with a $10k starting limit I nearly cried with the joy of hitting that mythical 5 digit credit limit exists for responsible adults.

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:42:31 GMT

@Anonymous wrote:
But I'll also freely admit for me at least, a high limit is very much an addiction & sense of pride. It makes me feel good about myself to know someone has deemed me worthy & trusted enough to be given a 5 digit limit.

As for applying for a new card, I would suggest looking at your monthly spending and use that to compare cashback/travel cards in order to determine where you can get the most benefit from your heaviest regular spending. As far as travel cards go I am enjoying the chase sapphire preferred that I just picked up as part of last month's 4 card spree (Amex BCE, CSP, Citi Costco, discoverIT. scores in 660-680,3 recently paid medical baddies).

Welcome to the forum, you'll be amazed at how much you can improve based on what you learn here

I can agree, SlightlyRemoved, it has been a high working on my credit, I receive a sense of pride from going from zero and being a "cash" person, I feel much better about myself having credit.

Thank you for your suggestions and welcoming me. I have learned so much already just in the past year, not even joining since the other day. I always wanted to join but I thought you had to pay a monthly fee. Glad I figured it out and got in! Take good care.

Re: Why such high CL's? and more questions...

ecxpa — Sun, 03 Sep 2017 18:44:05 GMT

Credit is without doubt a tremendous asset. Some of us take the long road to find that out especially if you are a "cash" person. Once you find out the benefits of good credit you tend to protect it at all costs. High CL are often misleading....... a CL of 10k is only worth about 3k before it starts affecting your credit, you don't want to ever carry balances above 30% of your credit line. Sometimes, in doing various projects I do carry balances for 2-3 mos. Because of my various cards there are usually a BT offer around on some of them. So I often charge materials on one card and if I need to do a BT to another card sometimes without a BT fee. Because of high CL, utilization is extremely low.

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:50:23 GMT

@fltireguy wrote:
I should also add that, from 2002-2015, I had NO credit cards at all. One day, while on vacation, I went to pick up my rental car with my GF. Well, that particular location didn't take debit cards (and I had well over $15k in the bank). My gf knew that i didn't have any cards, and that I was a cash person. It was SO embarrassing when I had o have her put it on her Visa.... that was the beginning of the turning point

WOW fltireguy, your story sounds like my partner and I...he's always been a "cash" guy, and encouraged me to be that way too, but 20 years being "cash" people has always hindered us. Building my credit up has really given me a lift in my self esteem, so I totally appreciate your story. Man you went from one extreme to another. From just 2015 with no credit to $199 that's unfathomable, amazing, and possible!

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 21:22:54 GMT

While I accept that some people have other reasons, I believe in many cases high CLs are more "because I can" and getting a sense of achievement. (Which can go too far when people think of a total CL was an asset of some type, which it isn't).

The often-cited "utilization" argument is, IMO, highly overblown. Credit score only matters when applying for something (including CLI/APR reduction) and around those times, if you are not carrying balances out of necessity, it is easy to get util to what ever you like by paying before statement cut. So at best, a high CL avoids the need to do this

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 18:59:04 GMT

@fltireguy wrote:
Why the high CL's ? That's a good question
I think it's a personal thing, well, at least in my case it is. I've had crappy credit pretty much all of my life. Before March 2016, at 50 years old, my highest CL ever was $1800 on a partially secured CapOne card. I set a goal, after reading posts on here for months- the goal was to have a high enough CL on a card to buy a new car with. Not that I ever would, or that a dealer would let me. But that was my goal. It took me a 15 months, and lots of hard work, but I went from a 535 TU in 11/2015 to my 757 that I have today. And, I went from $1800 in CL (excluding my car loan), to just north of $200k, with my highest CL being $23000 with NFCU, followed by $15k at PenFed. I finally got in with Chase, BofA, and other prime banks, as well as Amex. I did file BK years ago, but never burned any lenders thankfully

How did you do this so fast?

Re: Why such high CL's? and more questions...

Gmood1 — Sun, 03 Sep 2017 19:13:58 GMT

I do it for all of the above.. because I can, utilization and as a tool to help others and myself.
Went many years without it , just as others have in this thread. Now I guard it like money. It makes my life easier to have it. And I don't have to worry about utilization. Preparing to go back into business and some of these TLs will come in handy for payroll and other start up cost.

Re: Why such high CL's? and more questions...

Chickenpotpie — Sun, 03 Sep 2017 19:29:37 GMT

If you're smart about how you use the cards You get a higher limit for utlizaton purposes. I use about 1-2% of my overall UTL. I don't have a lot of cards, thats not for me, but I don't really need them. I also have one for if Life Happens, as it sometimes does.

Re: Why such high CL's? and more questions...

fltireguy — Sun, 03 Sep 2017 19:34:38 GMT

Kattak - I used collectionshield360 and somehow got a bunch of older baddies and collections deleted - I think that I had 8 that went away! Disputed a few more on my own. I paid an old CO from Target from 2011. (Aged off this June, but I still wanted to pay it anyway). Had an old BK age off in January. And then I had one baddie left - a VZW chargeoff that somehow had NOt gone to collections in a the 3 years it existed. Negotiated a settlement with VZ, and that put me where I am today, the only semi baddie is a paid CO, and I'm stuck with that for 3 1/2 more years, but it doesnt really seem to be hurting my scores or approvals at all anymore. The best move I have made was getting in with PenFed and NFCU (via NLSD last year when you could still do that). I'm no longer stuck in subprime car loan hell either 😁

Re: Why such high CL's? and more questions...

Anonymous — Sun, 03 Sep 2017 20:13:35 GMT

1) The definition of 'high CLs' in going to very dramatically based upon one's perspective...a lot of ppl would feel 5k or 10k is by far enough in their minds, whereas others would be disappointed with that as a SL

I think, even a conservative person should have plenty of room between what they 'would' spend vs the CL available to them...it provides enough room to "live" how one wants to w/o having to be overly concerned over 'this' month's utilization rate

i.e. if one knows their spend is 2-3k and has a CL of 10-12k = not a problem...whereas CLs at 5-7k creates a juggling act and possible suppression of credit scores, when something may come up when the score may matter.
Trying to stay in the most positive light as much as possible makes having access to more than one needs empowering.

2) As for the 'cash only' deal...many ppl fall into that due to misunderstanding how to manage their finances...a person can still be a 'cash' person while still manipulating the use of CCs
Ppl with this mantra forget ( conveniently) that no matter what, there are time lapse payments or bills that are due other than TODAY all the time...

The cable, light, gas company sends all bill...you don't pay upfront with "cash"

Girl's Scout cookies and candy apple sales are sign me up now and pay when asked

My point being a "cash" person can use a CC to pay for gas on Monday and pay the bill on Tuesday or Friday and still essentially be a "cash" payer

I'm assuming a "cash" person uses a checking account among other modern tools at our disposal since Little House on the Prairie 😜

Anyway, WHY would a person with CASH in hand NOT use a Visa to purchase an electronic item or say a refrigerator and get an extra warranty, 3rd party assistance in the event of a dispute ( not to mention an overall discount, due to Cash-back) knowing full well they can walk out of the store on Saturday and pay the 3rd CC on Sunday/Monday

No %, no debt, a paper trial with all the benefits of having, again a billion dollar corporation backing one if a dispute comes up...only FEAR and/or ignorance of how to manage one's affairs would challenge the wisdom of sending that spend through the CC.

Go ahead and have a dispute or want your 💰 back if you've given the vendor CASH =
A) Not a chance in heck
B) Totally at the MERCY of whatever the vendor says

CC transaction Visa steps in or AmEx, which has an excellent reputation for fighting on behalf of their clients, actually their 'members'

Doesn't make any sense to totally 'hide' from the "scoreboard" that we know exist in our country out of stubbornness, especially when one can totally can totally control what they pay and how w/o a lick of % paid.

It'd be like a person refusing to take 'test' knowing that that's how you get into college, grad school or get a DL
So now one isn't going to be a licensed driver outta principle c'mon now 😎

Re: Why such high CL's? and more questions...

driftless — Sun, 03 Sep 2017 20:38:45 GMT

There is another reason whey some have high CL's - they use them. There are some people of this board with signifcant income, others travel a lot. If you travel most weeks, and if some of that travel involves overseas flights, it is easy to spend a lot on a couple of credit cards; even more so if they concentrate their spend on one or two cards because of rewards. Think consultants, independent contractors, etc.

Re: Why such high CL's? and more questions...

Chickenpotpie — Mon, 04 Sep 2017 00:06:34 GMT

@Anonymous wrote:
While I accept that some people have other reasons, I believe in many cases high CLs are more "because I can" and getting a sense of achievement. (Which can go too far when people think of a total CL was an asset of some type, which it isn't).

The often-cited "utilization" argument is, IMO, highly overblown. Credit score only matters when applying for something (including CLI/APR reduction) and around those times, if you are not carrying balances out of necessity, it is easy to get util to what ever you like by paying before statement cut. So at best, a high CL avoids the need to do this

I won't deny you're right in most cases. I mean, people put in a lot of work to getting and keeping their credit right so I can see why they kinda go nuts.

I can really only talk to my own circumstances. Most of my CLI came organcally. There's been a handful of times (really less) that I did ask for an increase to boost UTL. I could get more, have more cards, but I don't because I don't NEED to. I let them give me more oganically sure...nothing wrong with that, but I'm pretty much done asking for more. For me its more or less about gettng better rates now. I will admit to being a bit of a weirdo especally because I hate to app.It makes me really sick to my stomach (and not in a good way!), so I do it only when necessary.

when my TCL was lower, I could easily use 10 or more% of UTL. Now even though I run the same amount through the cards, its lower because the TCL is higher.

Yes of course it feels fab that I can get great rates and good limits, can't lie about that. But its not my nature to go all out especially on credit. I feel like I wll always be in rebuilding.

Re: Why such high CL's? and more questions...

Anonymous — Mon, 04 Sep 2017 00:52:14 GMT

My main reason for getting my existing credit lines as high as possible is so that when I open new cards (business ones in particular), the limit will be high. Credit card companies issue credit lines that are somewhat comparable to your existing lines (i.e. it would be difficult to get approved for a 25+ K credit line if your largest line is 5K). Because I own a business, and spend anywhere from 3-10 K per day on my business credit card line, I have to ensure that I can get massive limits otherwise its a real pain to constantly have to pay off. And because I'm always on the hunt for a slightly better rewards card for my high spend, I will occasionally want to open a new card (for example the alliant cc).