topic Re: Benefit to 5k+ tradeline? in Credit Cards

Benefit to 5k+ tradeline?

Caught750 — Thu, 08 Mar 2018 15:47:10 GMT

So I'm pretty sure I've heard somewhere that there is a significant benefit to establishing a 5k+ revolving tradeline. Is there any truth to this? If so what are the benefits to this? Is this best to do ASAP during a rebuild?

Re: Benefit to 5k+ tradeline?

NRB525 — Thu, 08 Mar 2018 16:04:59 GMT

You have to look at it as a coincidence of progress on your rebuild, not a cause / driver of your rebuild.

As lenders get more comfortable with you paying on time, they see improvements in your score, and can give higher CL.

That does have a further positive benefit by improving utilization, so it is good to get those higher limits, but as a specific factor, +$5k limits are not a directly measured FICO formula item. You could achieve similar scores with 5 limits of $1k each, and keeping utilization in check, and probably better results than just one $5k card ( though by the time one gets to a $5k card, other cards are in the wallet as well )

Re: Benefit to 5k+ tradeline?

Caught750 — Thu, 08 Mar 2018 16:09:01 GMT

I wasn't necessarily referring to scoring per se. More so along the lines of hearing that a 5k tradeline can lead to potential or current lenders opening up a bit. Like crossing a line in the sand almost.

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 16:11:41 GMT

The anecdotal approach is yes, you absolutely need 5k+ lines for present credit health and for it's future.
Some high end cards start at 5k, with several even higher. Those banks scrutinize applicants, look more at just scores, can determine trends, and most likely do not want to be "first."
Doubtful anyone with a 720+ with under 5 years of history posesses only a slew of $1500 limit accounts.
Willing to say everyone with high scores, even if their best card is around 5k, they could apply with anyone anytime and replicate a handful more accounts that pop in at 5k or higher without "building" them. That is the reward of good credit health, and part of it is not applying for New accounts just to see if you can get them, you know already. It's sort of like martial arts. You don't need to spar with inexperienced to remind yourself you can put them on the ground every time.

Re: Benefit to 5k+ tradeline?

Caught750 — Thu, 08 Mar 2018 16:19:27 GMT

My signature is current with cards but scores have climbed a few points.

There is a lender I'd like to get in with for a few reasons and it's likely that a new acct could have a 5k line or be there in 90 days.

I'm currently debating whether to pull the trigger or wait a few months. AAoA is solid at about 5 years. Util is very low and DTI is 20ish. I have old baddies but have been solid for more than 5 years. This lender has alot of potential value and establishing a relationship has its own benefits beyond the card. They also use F9 which puts all scores over 700.

Re: Benefit to 5k+ tradeline?

bizarrocreditworld — Thu, 08 Mar 2018 16:38:01 GMT

I think there is a psychological thing about having a $5,000+ tradeline since it means you are being seen as a good customer or a good risk. I think this occurs at each additional $5,000 level until you start seeing very high limits.

Also, $5,000 is when you usually (but not always) start to see the SL for Visa Signature and MasterCard World cards. Getting one of these is like getting into a club for some, even if the benefits of such a card are never used. At the same time, APRs tend (again, not always) to be lower.

I've also heard it said that a large limit on one bank card can lead to offers for large limits on other bank cards. If you apply for a card, I think the lender would likely prefer a customer with multiple $5K cards than one who has a bunch of cards that adds up to $5K in credit.

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 17:47:02 GMT

I don't know if there are direct tangential benefits to your score because you reach $5000 or that you've reached $5000 because you've sufficiently improved your credit. Regardless I really don't care, I'm just happy to have reached that on my main card recently. I have no reason to try to apply for 100 more cards like people on here do. To be completely frank with you, I don't even know why they do it. I am basically progressively closing all my other cards because I have the one now with 5K. That's mutiples of my total expenses per month. Why would I need anymore?

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 18:28:41 GMT

It might depend on the lender... when I applied for my Amazon Prime Visa a few weeks ago (and that was my first ever account with Chase so I have zero history with them), they gave me an instant approval with an $8500 SL even though my credit reports showed my existing TLs at $2000 and $500...and utilization being on the high side at the time as well. Would they have given me more if my existing limits were higher? Maybe... maybe not.... no way to know without a time machine... or if I was the guy who wrote or configured the software. Maybe having a $50K HELOC was a factor as well...

In any case, as soon as I had the card and could set up online access I had the limit lowered to $1500... so I now my highest revolving TL is $2000. I remember in my 20s when I was approved for my first "gold card" with a $5K limit... my ego loved that... my checking account didn't... I ended up closing it less than a year later and take months paying it off... now in my 50s limits like that cause me to say "that's way too high".

Re: Benefit to 5k+ tradeline?

Caught750 — Thu, 08 Mar 2018 18:23:02 GMT

My personal thoughts on that are a little different. I'm considering applying for NFCU. The reason I'm interested in available revolving credit mostly pertain to in case of emergency. I PIF always and never pay interest. I have been working on an emergency fund as well but life has thrown alot of garbage my way, even in my early 30s.
My main concern is shutting down growth with lenders I already have relationships with. Honestly so far I've loved discover and Amex and would like to grow my cards with them. I've since opened PenFed but they're quite conservative.
I simply want some peace of mind with higher limits. I'd also heard that showing experience with those limits can help with growth or limit other growth.

Re: Benefit to 5k+ tradeline?

simplynoir — Thu, 08 Mar 2018 18:38:42 GMT

@Caught750wrote:
I wasn't necessarily referring to scoring per se. More so along the lines of hearing that a 5k tradeline can lead to potential or current lenders opening up a bit. Like crossing a line in the sand almost.

Yes, and just look at Chase and their CSR as proof. Chase doesn't like to be your first $10k+ card and like to see on your reports experiences with these size of CLs first before giving you the card. There might be datapoints some may provide that say otherwise but your chances definitely improve for sure by having those large limits already on your credit report.

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 18:51:10 GMT

I guess I can see the peace of mind perspective. But what I see is a ticking timebomb. Because if you ever get into a position in an emergency and you use that peace of mind, you are ultimately screwed. Its really nice in theory until you realize credit cards, even the best ones, have outrageous rates of interest. Your balances will balloon and you will be in hock for the rest of your life if you fall a month behind and start using those cards. Which makes you wonder why ultimately you want more. Also dont understand the relationship you seek with credit card companies. Thats not a relationship. They are sitting there hoping and praying and betting that one day you will slip up and you will use their 'protection' because once you use it, you may never stop paying them to use it. Don't get me wrong, I love my 5K limit, but I never confuse that for love of credit cards or credit card companies. I will always try to limit exposure as much as possible from really truly horrible financial instruments. 15% interest rates qualify as this. Its a tad better than a payday lender parasite, thats it.

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 19:12:29 GMT

While I don't know if any hard numbers have been crunched, the anecdotal evidence does strongly suggest, as pointed out earlier, that once you start getting $5K limits or more, the CLI spigots start to open and new account SL's start to become more generous.

It seems to me that getting my Penfed Power Cash Rewards CLI'ed to $7K helped me get my $10K Capital One QS Visa Signature and a $5K CLI on my Apple FCU Visa in January, and that in turn helped me get a huge CLI from $4K to $15K on Synchrony's Care Credit yesterday (as well as boosting Overstock from $5800 to $7800). As of today, 6 of my 10 cards are $5K or more (actually, $6K or more), with a $1500 gap between the bottom card in that range, Amazon, and Discover IT at $4500; of the bottom four cards, one is a tiny secured which I plan to close later this month, another is a store card (Walmart), the third is a "starter" Quicksilver MC upgraded from Platinum (and which still has the Platinum name on the back, a pretty clear giveaway), and I suspect my current Discover is also a "starter".

I got a single-figure preapproval today at Discover's prequal site for a new card and I'm thinking hard about it due to the possibility that I *might* be able to get a SL comparable to my top six cards. I had a huge day yesterday on CLI's, four of them totalling $15.5K, and I'm pretty sure that was influenced by my $10K Cap One Visa's having reported for the first time a week or so before I pushed the "luv buttons", as well as my paying down/off several other accounts.

Re: Benefit to 5k+ tradeline?

imaximous — Thu, 08 Mar 2018 19:13:08 GMT

@Anonymouswrote:
I guess I can see the peace of mind perspective. But what I see is a ticking timebomb. Because if you ever get into a position in an emergency and you use that peace of mind, you are ultimately screwed. Its really nice in theory until you realize credit cards, even the best ones, have outrageous rates of interest. Your balances will balloon and you will be in hock for the rest of your life if you fall a month behind and start using those cards. Which makes you wonder why ultimately you want more. Also dont understand the relationship you seek with credit card companies. Thats not a relationship. They are sitting there hoping and praying and betting that one day you will slip up and you will use their 'protection' because once you use it, you may never stop paying them to use it. Don't get me wrong, I love my 5K limit, but I never confuse that for love of credit cards or credit card companies. I will always try to limit exposure as much as possible from really truly horrible financial instruments. 15% interest rates qualify as this. Its a tad better than a payday lender parasite, thats it.

I don't see my credit cards as peace of mind. I use them to maximize my rewards potential. I don't have as many cards as some other members here, but most of my cards serve a different purpose. I can't have a 5k card only. There are months that I spend more than that, so I need a larger CL. Also, I don't always PIF before statement cuts but always before due date, so if I spend 5k on a card that has a 5k limit, I'm totally maxed out. Even with a 10k limit, I'm already at 50% utilization. But if I use a 40k+ CL card, I don't have to worry about utilization or freaking out a bank or two. Particularly if that's my only card or have a couple low limits only. Ultimately, my scores won't suffer either.

I only spend the money I have, so instead of paying for it in cash and get nothing back or any of the purchase protection/warranty benefits, I use the cards that give me the highest returns or best benefits. It takes some work at times, but I actually enjoy squeezing the last % from my cards, and it has nothing to do with financial need either. OTOH, my DW can't be bothered in the least bit, and she'll use the wrong cards everywhere. Whatever comes out of her purse first.

Re: Benefit to 5k+ tradeline?

Anonymous — Thu, 08 Mar 2018 20:37:17 GMT

@Anonymouswrote:
While I don't know if any hard numbers have been crunched, the anecdotal evidence does strongly suggest, as pointed out earlier, that once you start getting $5K limits or more, the CLI spigots start to open and new account SL's start to become more generous.

While this view is very popular here, I have some doubts! Many of us (including me) with lots of cc's over time have seen no monotonic pattern is SLs, either within a lender or between.

The problem is confounding factors: in particular, why did you get your first high limit. In general, it's because something on your report improved. And when other lenders look at your report, they see the same "good" thing, and can make the same decision to give a highish limit, without being particularly aware of the limits of other cards. So the issuers "matching" might be caused by the same factors, rather than any real causation. And within a lender, you may see first card is lower, second is very high, third is low again, either because you are reaching an exposure threshold, or for some other unknown reason.

Now we here that some lenders (e.g. Chase) don't want to be the first lender to give you $X CL, but there are plenty of counter-examples there too.

That said, for "normals" who don't pay off their balance prior to statement cut, a new high limit card might reduce reported utilization and thus increase FICO score, encouraging another lender to give a higher SL. But that's because of the score, not because of the high CL.

Re: Benefit to 5k+ tradeline?

wasCB14 — Thu, 08 Mar 2018 21:27:17 GMT

Let's not forget the role of one of the few numbers people don't share so freely on here: INCOME

A rebuilder making $200k may find $5k a point at which many CLs grow quickly.

Someone with a much better credit history but only making $40k may have trouble getting over $10k.

Re: Benefit to 5k+ tradeline?

Caught750 — Thu, 08 Mar 2018 21:29:22 GMT

Income is just shy of 6 figures

Re: Benefit to 5k+ tradeline?

Kforce — Thu, 08 Mar 2018 23:43:59 GMT

I agree 100% with "longtimelurker" and "NRB525".

Re: Benefit to 5k+ tradeline?

ecxpa — Fri, 09 Mar 2018 12:38:00 GMT

In the end credit scores matter and utilization affects credit scores. Everybody talks about PIF and that's good, however some people do carry balances. With a 5K card the amount you can use without potentially affecting your credit score is only $1,500 (30% of credit line). If your income requires you to sometimes carry a balance, keep this in mind. Likewise, irregardless of your CL you only have about 30% of that line to carry a balance without potentially getting a ding on your credit score............this is my take on CC limits.

Re: Benefit to 5k+ tradeline?

Anonymous — Fri, 09 Mar 2018 18:20:48 GMT

@ecxpawrote:
In the end credit scores matter and utilization affects credit scores. Everybody talks about PIF and that's good, however some people do carry balances. With a 5K card the amount you can use without potentially affecting your credit score is only $1,500 (30% of credit line). If your income requires you to sometimes carry a balance, keep this in mind. Likewise, irregardless of your CL you only have about 30% of that line to carry a balance without potentially getting a ding on your credit score............this is my take on CC limits.

Exactly. This is a key reason why so much emphasis is placed on growing one's credit lines via CLI's and getting into a position to be able to get cards with really good SL's and the potential to grow easily. The more total revolving credit one has, the more one can spend and still keep utilization under the 30% line.

Re: Benefit to 5k+ tradeline?

Anonymous — Fri, 09 Mar 2018 18:28:46 GMT

@Caught750wrote:
So I'm pretty sure I've heard somewhere that there is a significant benefit to establishing a 5k+ revolving tradeline. Is there any truth to this? If so what are the benefits to this? Is this best to do ASAP during a rebuild?

With certain banks a 5k card qualifies one for visa signature card or WE MasterCard. Which can give a few more benefits like concierge for example. 5k is often the minimum for this. Yet others like Amazon Prime Visa give any limit these benefits. Every bank is different. When rebuilding it often takes a couple years of card useand baddies dropping off with time before one qualifies for these cards. But some get there quicker. YRMV. Most people don’t even use those extra benefits. Some do.