topic Re: Do higher limits increase the chances of higher SL limits in the future? in Credit Cards

Do higher limits increase the chances of higher SL limits in the future?

masscredit — Sat, 07 May 2022 17:29:47 GMT

Does having cards with decent/higher limits increase the changes of higher SLs for new cards in the future? Like for a person who is rebuilding, they might start off with cards that are in the $250 - $2000 range. I think they'd have to work up to cards with five figure limits. Where as a person who has cards that are mostly in the $10K plus range, I think most new cards will have limits like that. Am I correct with this? I know scores and income are also taken into consideration.

Re: Do higher limits increase the chances of higher SL limits in the future?

Remedios — Sat, 07 May 2022 18:08:02 GMT

@masscredit wrote:
Does having cards with decent/higher limits increase the changes of higher SLs for new cards in the future? Like for a person who is rebuilding, they might start off with cards that are in the $250 - $2000 range. I think they'd have to work up to cards with five figure limits. Where as a person who has cards that are mostly in the $10K plus range, I think most new cards will have limits like that. Am I correct with this? I know scores and income are also taken into consideration.

You are incorrect if you're asking for yourself, somewhat correct if that's a general question.

For you, the ink on BK7 hasn't dried, you've invested $8000 (I think) in secured cards, but those limits will mean nothing for a while.

Once your BK is older, those lenders you didn't burn and who do not have UW criteria that either excludes applicants with BK or sets time limit on applications when BK is present will follow their own guidelines, not the limits they see on your CR.

It's also not about "working up to higher limit" (according to me), it's more of "there needs to be significant chunk of time between financial stress that caused default before we want to play".

So, we really aren't working anything, time is.

Additionally, if you haven't burned lenders who are BK/rebuilder friendly, five figure SL can happen realtively quickly, but I wouldn't hold my breath for a while.

My personal experience with approvals is that every application is cat in a bag.

Those who gave me $25,000 or higher didn't care about my $500.00 card

Those who gave me $5000.00 SL clearly didn't care about $50,000.00 card

The idea behind the limit is to give us what algorithm thinks we can manage based on our CR, income, and whatever secret sauce is baked in UW standards.

When we're rebuilding, algorithm can see we couldn't manage what we had, hence denials and/or toy limits for a while.

I think your situation is rather unique, so while everyone who responds will probably have a different take on what drives limits up, I don't know how much of that will be applicable to your situation.

Re: Do higher limits increase the chances of higher SL limits in the future?

DONZI — Sat, 07 May 2022 23:20:39 GMT

In and of itself, I imagine it's like a credit score in importance...and maybe only of importance if an human UW is involved in the process.

My first card SL was 1k despite having around double that with PP Credit. My second card was a 10k SL. Third card from same FI as 1st was SL of 3k as was the 4th. I've gotten CLI from PP Credit, Disco but nothing that broke 10k, NFCU gave me an 8k CLI. I've not bothered with trying CLI with 5/3rd or Synovus since 5/3rd cards are nothing remarkable and the Synovus gave me a nice SL.

I have a thin file and very short history basically and keep my income relatively low.

I'd imagine a ton of people here have a majority of 10-20k cards still get SL offers of significantly lower depending on the FI voodoo.

Re: Do higher limits increase the chances of higher SL limits in the future?

masscredit — Sat, 07 May 2022 18:18:15 GMT

@Remedios Thank you for the detailed reply! This question was a mix of being for my own general knowledge and also wondering how it will apply to my situation. I plan to have a long history with one of my secured cards (TD Bank). I even finished moving all of my banking over to them today. That card should graduate in less than a year so my current $5K limit will probably grow with time. The other one, soon to be two other cards are just temps until I can be approved for better cards in the fiture.

Re: Do higher limits increase the chances of higher SL limits in the future?

Remedios — Sat, 07 May 2022 18:45:05 GMT

@masscredit wrote:
@Remedios Thank you for the detailed reply! This question was a mix of being for my own general knowledge and also wondering how it will apply to my situation. I plan to have a long history with one of my secured cards (TD Bank). I even finished moving all of my banking over to them today. That card should graduate in less than a year so my current $5K limit will probably grow with time. The other one, soon to be two other cards are just temps until I can be approved for better cards in the fiture.

Well, it's great you got two decent cards to start. I just wouldn't be too aggressive with rebuild till in position to do so.

Better approvals will come, but you will need time. If you're applying for secured cards, go for ones that provide rewards, it will minimize desire to apply for unsecured cards from lenders that are likely to deny or give toy limits until the time is right.

That way, you aren't really missing out, other than money kept as a deposit.

I can tell you from personal experience that life without credit is rough. I had a bunch of lates 20 years ago because I was too lazy to mail checks on time, very young and very dumb.

Went to buy a car, nothing but cosigner would do. I knew nothing about credit, I thought everything was going to stay forever, so I just gave up on it.

I was fortunate, I had career and decent income, so I managed just fine or at least I thought so but reality is, you really cannot go to the bathroom without credit.

Build wise, not fast. It's tempting but also counterproductive. In a way, your credit is being reborn and you get to shape it from the scratch. Only do things you'd do if all options were available to you.

If you wouldn't apply for something if BK wasn't present, don't apply for it.

Do t weigh yourself down with useless store cards because of the limits on them, those come and go and those limits won't help, time and your new payment history will.

While you might be temporarily without many options, act like all are available. Be selective, set things right, and live in today, not in the future approvals.

I would also suggest you seek new lenders for banking (ones that weren't included in BK). That way, you have some business relationship with potential for future approvals, but do research their BK policies first.

I wish you a good luck and fast recovery in your rebuild

Re: Do higher limits increase the chances of higher SL limits in the future?

NRB525 — Sat, 07 May 2022 18:57:00 GMT

Correlation vs Causality.

Higher credit limits are generally available to folks with higher scores.

Higher starting limits are generally available to folks with higher scores.

The causality is the higher scores, combined with income.
Correlation is only that the limits on growing cards and newer cards are higher for a particular person.

If we work on improving score, higher limits generally will follow.

Re: Do higher limits increase the chances of higher SL limits in the future?

masscredit — Sat, 07 May 2022 18:55:48 GMT

@Remedios Thank you! I lived without credit for 16 months. That way of life carried over to now and how I plan to live in the future. The new credit that I have been seeking lately is for rebuilding. Everything will be PIF with one card reporting 8.9% or less. I now only make purchases if I have the money for it. I don't even want a car payment in the future but I might need one someday. I throughly researched any of the cards I've applied for lately. DCU used to be my main bank. Their card wasn't IIB but I wanted a change to go along with my fresh start so now it's TD Bank. One thing that I really like about them is there are branches all over my area. I had to take a road trip to visit my "local" DCU.

I'm just going to let these cards do their thing for awhile and will be very picky when it comes to new cards in the future.

Re: Do higher limits increase the chances of higher SL limits in the future?

Aim_High — Sat, 07 May 2022 21:16:23 GMT

@Remedios wrote:
@masscredit wrote:
Does having cards with decent/higher limits increase the changes of higher SLs for new cards in the future?
... somewhat correct if that's a general question.

Not having related this question to your other recent replies, @masscredit, I probably would have missed the opportunity to give you the great specific guidance that you received from @Remedios. Yes, since you also asked for general purposes, current credit limits are often one of several considerations for lenders when they assign a new SL. As a general rule, for someone with good credit and a clean or mostly-clean report, current limits will probably be consistent with the general range that their finances comfortably support and that they've shown they have been able to manage responsibly. But the assignment of limits is complicated and derogatories will substantially detract, as noted in the reply above. Absent the derogatories, some of the many factors that affect SL besides other current credit limits would be income, debts, FICO score, and recent credit-seeking behavior (new accounts and/or inquiries.)

Re: Do higher limits increase the chances of higher SL limits in the future?

AverageJoesCredit — Sun, 08 May 2022 03:02:17 GMT

@NRB525 wrote:
Correlation vs Causality.

Higher credit limits are generally available to folks with higher scores.

Higher starting limits are generally available to folks with higher scores.

The causality is the higher scores, combined with income.
Correlation is only that the limits on growing cards and newer cards are higher for a particular person.

If we work on improving score, higher limits generally will follow.

Imo, score does not equate to higher sl or limits. Does it play a part, maybe, but I don't think a lender will dole out a specific amount because someone has a 750 or 800. Those scores can be thin, thick or in between and don't really tell the whole picture of the person applying. I've learned not to think my score will get me an approval but how I manage my credit. This is only my opinion though.

As to OPs question maybe in the future for some lenders, they may be enticed to give a higher limit based on what they see on one's report and how you manage that limit. Profile and lender dependant. To add the only time I've experienced that or what I perceived as a possible reasoning was after years of toiling in low limit purgatory with Penfed, they finally opened the coffers in regards to high limits, to me, perhaps after seeing the limit I achieved with Navy. Again just my experience/ feeling.

Re: Do higher limits increase the chances of higher SL limits in the future?

wasCB14 — Sun, 08 May 2022 04:27:39 GMT

When I called recon for JetBlue (100k SUB) Barclays told me my total credit limits with them would not exceed $20k (a modest amount given 6 years of history with them and my overall credit profile) unless I started spending more with them.

Re: Do higher limits increase the chances of higher SL limits in the future?

masscredit — Sun, 08 May 2022 04:31:06 GMT

Something else to add to this is high balances. Would a person who uses a decent amount of their limit once in awhile, like $4K-$5K on a card with a $10K limit then pays it be more attractive than a person with the same limit who only uses a few hundred dollars. It seems like there wouldn't be a need for the higher limit.

Re: Do higher limits increase the chances of higher SL limits in the future?

SouthJamaica — Sun, 08 May 2022 04:53:33 GMT

@masscredit wrote:
Does having cards with decent/higher limits increase the changes of higher SLs for new cards in the future? Like for a person who is rebuilding, they might start off with cards that are in the $250 - $2000 range. I think they'd have to work up to cards with five figure limits. Where as a person who has cards that are mostly in the $10K plus range, I think most new cards will have limits like that. Am I correct with this? I know scores and income are also taken into consideration.

In my experience, yes, your existing limits may affect the limit you might be offered on a new card.

Re: Do higher limits increase the chances of higher SL limits in the future?

FinStar — Sun, 08 May 2022 05:06:46 GMT

@masscredit wrote:
Something else to add to this is high balances. Would a person who uses a decent amount of their limit once in awhile, like $4K-$5K on a card with a $10K limit then pays it be more attractive than a person with the same limit who only uses a few hundred dollars. It seems like there wouldn't be a need for the higher limit.

Yes and no. There are DPs that support a lot of frequent high usage where a potential auto-CLI or CLI is possible. Then again, we have seen DPs where it doesn't happen. It is profile-specific and based on the lender. By and large, an individual with the presence of any negative items on CRs, such as a BK, is not likely to achieve the same results than someone who has a clean profile -- again it depends on the profile, the lender and algorithms.

Re: Do higher limits increase the chances of higher SL limits in the future?

Aim_High — Sun, 08 May 2022 05:09:21 GMT

@masscredit wrote:
Something else to add to this is high balances. Would a person who uses a decent amount of their limit once in awhile, like $4K-$5K on a card with a $10K limit then pays it be more attractive than a person with the same limit who only uses a few hundred dollars. It seems like there wouldn't be a need for the higher limit.

That's related to but a completely separate question from your original, @masscredit. And as with many things related to credit, it just depends! While starting limits are driven by certain factors that have already been summarized, credit limit increases have their own set of variables. Some of those are similar to what yields the original starting limit while other factors may be separate.

Spending levels (high individual utilization) **CAN** in some cases help to increase credit limits. There are lenders with whom most of us are unlikely to see any increases at all unless spending hits certain benchmarks. On the other hand, just like with the various starting limit factors, spend-and-pay is not the end-all answer in all scenarios. One excellent example is the huge number of posts we see on My Fico with members who have very low limit "bucketed" cards with lenders like Capital one. They use them multiple times their limit every single month yet they refuse to grow.

Likewise, regardless of spending levels, other credit factors must be in-order. This is where the previous discussion of derogatories comes into play. A lender needs to feel comfortable that a consumer can and will repay any debts. Derogatories cast serious doubt on that question. Likewise, a lender may stop giving increases once a threshold is reached of credit limit relative to income and debts, regardless of spending or FICO score. They also may hesitate to add credit if you've been actively seeking new credit elsewhere in the past 6/12/24 months. You're making them nervous.

Spending is also not even necessary in other cases. We have lenders such as Navy Federal who seem to give CLIs regularly without spending. While some lenders are highly sensitive to recent spend, others are only slightly or moderately sensitive to it.

Overall Credit Age (thickness of file) and age of the particular account may lead to increases without significant spending. Some of my high limit cards have grown that way over time without having to spend anywhere close to their current limits. The lender just rewards loyal longer-term responsible customers.

I've written a lot about credit limits. If you want to read my most recent post, go to >>this link<< and then follow the links to some of my previous posts within each message. (You'll connect to other messages several times.)

ETA: @FinStar beat me to the POST button by one minute. Lol

Re: Do higher limits increase the chances of higher SL limits in the future?

Anonymous — Sun, 08 May 2022 16:00:59 GMT

@AverageJoesCredit wrote:
@NRB525 wrote:
Correlation vs Causality.

Higher credit limits are generally available to folks with higher scores.

Higher starting limits are generally available to folks with higher scores.

The causality is the higher scores, combined with income.
Correlation is only that the limits on growing cards and newer cards are higher for a particular person.

If we work on improving score, higher limits generally will follow.
Imo, score does not equate to higher sl or limits. Does it play a part, maybe, but I don't think a lender will dole out a specific amount because someone has a 750 or 800. Those scores can be thin, thick or in between and don't really tell the whole picture of the person applying. I've learned not to think my score will get me an approval but how I manage my credit. This is only my opinion though.

As to OPs question maybe in the future for some lenders, they may be enticed to give a higher limit based on what they see on one's report and how you manage that limit. Profile and lender dependant. To add the only time I've experienced that or what I perceived as a possible reasoning was after years of toiling in low limit purgatory with Penfed, they finally opened the coffers in regards to high limits, to me, perhaps after seeing the limit I achieved with Navy. Again just my experience/ feeling.

Right, but I think @NRB525 Correlation vs Causality point still holds. Replace "score" with "credit profile experience" or something. You do well with one lender because something is now "good" about you. You then do well with some other lenders, not because of lender 1s faith, but because of the same goodness.

Re: Do higher limits increase the chances of higher SL limits in the future?

FireMedic1 — Sun, 08 May 2022 10:55:15 GMT

@masscreditYour fresh out. I was fresh out at one time too. Work on building a history and being responsible for now. The rest will fall in place as time goes by. We all want it now. But us BK'er's just have to wait our time. Great answers so far. Over 6 years of building and my AMEX BCE was approved for $1000. I didn't post are you kidding me? Thats it? No it was a relief I got in. History will do the rest with AMEX.

Work on the preset so the future will be there when you get there. Put your eyes on the prize and work towards it. Dont get ahead of yourself. For me it isnt the limit. Its the perks that reward me for using the card. I wont pay interest. I'm middle class with 1 FT job and 2 PT jobs. Me carry a $10,000 balance? No way! Yes I have some nice CL's. I didnt ask. They gave it to me. Really dont need it all. You'll get there. You may get the card one day you want at a low SL. But it will grow to what you wanted when approved. Just keep at it. Nowhere to go but up the ladder for us BK folks. One step at a time.

Re: Do higher limits increase the chances of higher SL limits in the future?

GatorGuy — Sun, 08 May 2022 15:54:31 GMT

In my opinion, the following are the three things that affect credit limits the most:

1) Income

2) Income

3) Income

In all seriousness, credit score and spending do play a part. Length of credit history, length of history with the FI can impact it less so as well.

One example is my wife applied for AOD last year. Despite having a high six figure income, perfect credit history, multiple cards of $50k or more, and average CL of cards around $25k, AOD had issues figuring out her self employment income. They thought it was far lower than she reported. As a result they only gave her a CL of $5k even though that was by far her lowest CL and she hadn't received a CL lower than $20k in years. They told her to reapply after 6 months. She put probably $20k to $25k a month on the card and PIF for six months and reapplied. Yet again was denied for an increase. She eventually got it worked out with them through the CEO and got their max CL of $25k.

AOD is not the typical lender. They are a small conservative credit union. However, I use this as an example because it perfectly illustrates that my wife had perfect credit, high credit limits, long credit history, a thick file and even large spending with the FI but they still refused a CLI because of what they thought was low income.

Re: Do higher limits increase the chances of higher SL limits in the future?

NRB525 — Sun, 08 May 2022 22:30:05 GMT

@GatorGuy wrote:
In my opinion, the following are the three things that affect credit limits the most:

1) Income
2) Income
3) Income

In all seriousness, credit score and spending do play a part. Length of credit history, length of history with the FI can impact it less so as well.

One example is my wife applied for AOD last year. Despite having a high six figure income, perfect credit history, multiple cards of $50k or more, and average CL of cards around $25k, AOD had issues figuring out her self employment income. They thought it was far lower than she reported. As a result they only gave her a CL of $5k even though that was by far her lowest CL and she hadn't received a CL lower than $20k in years. They told her to reapply after 6 months. She put probably $20k to $25k a month on the card and PIF for six months and reapplied. Yet again was denied for an increase. She eventually got it worked out with them through the CEO and got their max CL of $25k.

AOD is not the typical lender. They are a small conservative credit union. However, I use this as an example because it perfectly illustrates that my wife had perfect credit, high credit limits, long credit history, a thick file and even large spending with the FI but they still refused a CLI because of what they thought was low income.

Glad to hear she got the limit increased.

This is an example where the question "How do I get higher limits on new card apps" is not an appropriate generic question. "How do I get higher starting limits / CLI, with this specific card issuer" is the appropriate way to ask. Each lender has nuances within their underwriting methods, but all lenders, within their range of card limits, will rely on credit score primarily and factors like income and usage as additional factors.
BofA is not directly comparable to Chase, AMEX has methods, credit unions have their view. In this case, AOD seems not prepared for self employment income, without getting eyes on the data in a different way than their regular process.

Re: Do higher limits increase the chances of higher SL limits in the future?

KJinNC — Mon, 09 May 2022 14:09:46 GMT

I think there is a correlation between having cards with high credit limits, and being approved for new cards with high credit limits, but it may be as simple as, the same reason your current card has a high limit results in the new card also having a high limit.

Re: Do higher limits increase the chances of higher SL limits in the future?

masscredit — Mon, 09 May 2022 14:22:00 GMT

One of the reasons I ask this question is because I'm rebuilding from a BK. I'm focusing on secured cards so I can start off with limits in the $3K-$5K range plus and I know I'll be approved for them. Two of the cards should graduate to unsecured in a year. I think these will pave the way to better SLs in the future over me going with sub-prime cards that have toy limits.