topic Target credit limits & high utilization in Credit Cards

Target credit limits & high utilization

91173 — Wed, 30 Nov 2022 18:22:58 GMT

I have a couple of questions:

1. If you use almost all of a low-limit card but it's still a very small amount compared to your overall credit limits, will it tank your score? I have always read it can drop your score like 50 points. I have a $1300 limit on my Target RedCard. I now have $1261 on it. My total limits are >$100K across several other cards & most are <1% utilized, with one being about 18-19% utilized. Just wondering if I should pay a chunk on this Target card weeks before my statement cuts on December 22???

2. How do you actually get a Target credit limit increase? I called to ask for one, and the rep said, "We don't do that." Okay. I've never really understood how they make decisions. My ex-wife applied for one under her income only and she got a $3K limit. She had a mortgage on her credit report and good, but not great, credit -- ~750 scores. I applied for one a year later using only my income, which was 3x hers, a fully-paid mortgage on my reports, and substantially higher FICO scores, all >800, and I got a $900 limit. They finally bumped me up from $900 to $1300 a few years ago. Their decision-making process just seems totally bizarre. For what it's worth, I spend a lot at Target. There's literally one across the street, so I buy groceries there all the time.

Thanks for any insight.

Re: Target credit limits & high utilization

PNWRambler — Wed, 30 Nov 2022 18:54:46 GMT

Yes, high utilization will always tank your score somewhat. Ideally you want to stay below 30% and below 9% is even better. Anything over 50% will look bad and anything over 90% will be considered "maxed out". If you make a payment before the statement cuts then it will not affect your score, the statement balance is the only thing that reports. However, if you do have high util one month and it goes back down shortly after, your score will recover quickly. Utilization is always a temporary ding.

I've never had a Target card, can't help you with #2

Re: Target credit limits & high utilization

FinStar — Wed, 30 Nov 2022 19:02:49 GMT

@PNWRambler wrote:
Yes, high utilization will always tank your score somewhat. Ideally you want to stay below 30% and below 9% is even better. Anything over 50% will look bad and anything over 90% will be considered "maxed out". If you make a payment before the statement cuts then it will not affect your score, the statement balance is the only thing that reports. However, if you do have high util one month and it goes back down shortly after, your score will recover quickly. Utilization is always a temporary ding.

I've never had a Target card, can't help you with #2

As mentioned above, OP, utilization penalties are still assessed whether in the aggregate or by single tradeline(s) when reported to the CRAs.

As far as a CLI on the Target CC, there's no option for requesting one. A variety of individuals tend to use their Target card fairly often, some let their balance report monthly/PIF and also update their annual income online every month even if there's no change to AGI.

Re: Target credit limits & high utilization

Remedios — Wed, 30 Nov 2022 19:16:02 GMT

If you let maxed card report, you will lose some points. Those points are going to be back after next reporting cycle when lower or no balance is reported.

I do not have an opinion on whether you should allow it to report like that or pay it down a little. I do not think anything will happen if it's short'n'sweet, but that also depends on your other lenders. Some will jump the gun, others just won't give increases and such.

I've let near-maxed cards report a few times, nothing bad happened, but it looked gnarly and I mourned my lost Ficos till resurrection in the following month.

If that sounds appealing, do it

If not, pay it down somewhat, then let it report.

Re: Target credit limits & high utilization

91173 — Wed, 30 Nov 2022 19:26:09 GMT

Yeah, I'm trying to decide what to do. I'd rather keep the money earning interest until late January, which is when it would get paid. I just worry some issuer has some algorithm that's automatically going to slash a limit or close a card. I can't imagine they would for something like this, but you never know. Most have $0 balances, since I tend to use the same few cards and just keep the others mostly around for age (all of them are very old, I just do product changes once in a while).

Re: Target credit limits & high utilization

Remedios — Wed, 30 Nov 2022 19:30:57 GMT

@91173 wrote:
Yeah, I'm trying to decide what to do. I'd rather keep the money earning interest until late January, which is when it would get paid. I just worry some issuer has some algorithm that's automatically going to slash a limit or close a card. I can't imagine they would for something like this, but you never know. Most have $0 balances, since I tend to use the same few cards and just keep the others mostly around for age (all of them are very old, I just do product changes once in a while).

Unless you have any recent derogs, let it ride. It's kinda fun, especially if you spend decent amount of time staring at your scores.

Once it's over, you will stare at your scores less because you'll know sky doesn't fall that easy

Re: Target credit limits & high utilization

91173 — Tue, 31 Jan 2023 15:59:24 GMT

Just thought I'd post a follow-up. I ended up going to $1301 on the card. But right after I posted that, I was perusing the board and found a bunch of people complaining about FNBO slashing limits and closing cards. My second-oldest card is over 28 years old, and the issuer just switched to FNBO. I keep it around solely for the age, so I figured why give them a reason to close it because I went to 100% on a $1300 Target card?

So I ended up paying $1000 before my December statement cut so it only came in at $300. And now two statements later and my Target hasn't changed my limit. I imagine we will colonize Mars before they increase my limit.

Re: Target credit limits & high utilization

OmarGB9 — Tue, 31 Jan 2023 17:36:08 GMT

@91173 wrote:
Just thought I'd post a follow-up. I ended up going to $1301 on the card. But right after I posted that, I was perusing the board and found a bunch of people complaining about FNBO slashing limits and closing cards. My second-oldest card is over 28 years old, and the issuer just switched to FNBO. I keep it around solely for the age, so I figured why give them a reason to close it because I went to 100% on a $1300 Target card?

So I ended up paying $1000 before my December statement cut so it only came in at $300. And now two statements later and my Target hasn't changed my limit. I imagine we will colonize Mars before they increase my limit.

Paying it down was still the right move. Paying in full is even better, whenever you can. Anyway nothing is guaranteed in the credit world.

Re: Target credit limits & high utilization

BronzeTrader — Tue, 31 Jan 2023 17:51:56 GMT

Personally I do not let CC utilization impact how I use my CCs. If I have a $2,000 charge today, I'll look at the card(s) that will give me the highest rewards. Then I look at my card CL. That $2k stays with me, no difference which card. Of course personal and business cards are separate. So I like to use Biz cards is the charge is more biz related.

I do not really care if one card has 85% utilization, but overall it is 4%. Those alerts will just go off next statement or so.

Re: Target credit limits & high utilization

Kforce — Tue, 31 Jan 2023 17:54:51 GMT

@Remedios wrote:
@91173 wrote:
Yeah, I'm trying to decide what to do. I'd rather keep the money earning interest until late January, which is when it would get paid. I just worry some issuer has some algorithm that's automatically going to slash a limit or close a card. I can't imagine they would for something like this, but you never know. Most have $0 balances, since I tend to use the same few cards and just keep the others mostly around for age (all of them are very old, I just do product changes once in a while).
Unless you have any recent derogs, let it ride. It's kinda fun, especially if you spend decent amount of time staring at your scores.
Once it's over, you will stare at your scores less because you'll know sky doesn't fall that easy

I also played with one card for a few months to see what would happen to my scores.

Took it to 95% for a month.

Score did drop but nothing else bad happened.

High utilization for months might be a different story

Re: Target credit limits & high utilization

Remedios — Tue, 31 Jan 2023 18:04:35 GMT

@OmarGB9 wrote:
@91173 wrote:
Just thought I'd post a follow-up. I ended up going to $1301 on the card. But right after I posted that, I was perusing the board and found a bunch of people complaining about FNBO slashing limits and closing cards. My second-oldest card is over 28 years old, and the issuer just switched to FNBO. I keep it around solely for the age, so I figured why give them a reason to close it because I went to 100% on a $1300 Target card?

So I ended up paying $1000 before my December statement cut so it only came in at $300. And now two statements later and my Target hasn't changed my limit. I imagine we will colonize Mars before they increase my limit.

Paying it down was still the right move. Paying in full is even better, whenever you can. Anyway nothing is guaranteed in the credit world.

I'm curious, why pay down was *right* move?

I can understand prolonged high utilization leading to AA, but if one month with maxed card happened to be end of the world, hardly anyone would have an open credit card.

1% (rounded) utilization is an exception, not real world standard.

As far as FNBO goes, I get it, they lowered some limits, but are their customers supposed to live in credit fear and manage their finances in a way that they think FNBO (or any other lender) would like or should person manage their finances in a way that benefits them personally?

I'm normally a very cautious person, takes me 1hr to cross a street, but I think this is exaggerating risk associated with short term, single card high utilization.

Re: Target credit limits & high utilization

SouthJamaica — Tue, 31 Jan 2023 18:13:07 GMT

@91173 wrote:
I have a couple of questions:
1. If you use almost all of a low-limit card but it's still a very small amount compared to your overall credit limits, will it tank your score? I have always read it can drop your score like 50 points. I have a $1300 limit on my Target RedCard. I now have $1261 on it. My total limits are >$100K across several other cards & most are <1% utilized, with one being about 18-19% utilized. Just wondering if I should pay a chunk on this Target card weeks before my statement cuts on December 22???

2. How do you actually get a Target credit limit increase? I called to ask for one, and the rep said, "We don't do that." Okay. I've never really understood how they make decisions. My ex-wife applied for one under her income only and she got a $3K limit. She had a mortgage on her credit report and good, but not great, credit -- ~750 scores. I applied for one a year later using only my income, which was 3x hers, a fully-paid mortgage on my reports, and substantially higher FICO scores, all >800, and I got a $900 limit. They finally bumped me up from $900 to $1300 a few years ago. Their decision-making process just seems totally bizarre. For what it's worth, I spend a lot at Target. There's literally one across the street, so I buy groceries there all the time.

Thanks for any insight.

1. Yes it will tank your score. Yes you should pay a "chunk" before the statement cuts.

2. I don't know how to precipitate a credit limit increase; my impression is that you just have to wait until they bestow one on you. I think the best way is to use the card a lot but keep paying it down to zero.

Re: Target credit limits & high utilization

SouthJamaica — Tue, 31 Jan 2023 18:14:51 GMT

@91173 wrote:
Yeah, I'm trying to decide what to do. I'd rather keep the money earning interest until late January, which is when it would get paid. I just worry some issuer has some algorithm that's automatically going to slash a limit or close a card. I can't imagine they would for something like this, but you never know. Most have $0 balances, since I tend to use the same few cards and just keep the others mostly around for age (all of them are very old, I just do product changes once in a while).

The interest rate you would have to pay on the Target card would be far greater than any interest you could earn on the money.

Re: Target credit limits & high utilization

NoMoreE46 — Tue, 31 Jan 2023 19:34:27 GMT

Back in the day (2017) TD was chucking CLI on the MC Redcard every six months like clockwork for just over two years.

CLI seem to be less frequent since then.

The noted decline can be from:

1) ???

2) ???
etc.

PS, if your CL ever gets to

~ $4000, your Store card converts to the MC and IIRC, the maximum CL is $17000.

Re: Target credit limits & high utilization

OmarGB9 — Tue, 31 Jan 2023 21:02:36 GMT

@Remedios wrote:
@OmarGB9 wrote:
@91173 wrote:
Just thought I'd post a follow-up. I ended up going to $1301 on the card. But right after I posted that, I was perusing the board and found a bunch of people complaining about FNBO slashing limits and closing cards. My second-oldest card is over 28 years old, and the issuer just switched to FNBO. I keep it around solely for the age, so I figured why give them a reason to close it because I went to 100% on a $1300 Target card?

So I ended up paying $1000 before my December statement cut so it only came in at $300. And now two statements later and my Target hasn't changed my limit. I imagine we will colonize Mars before they increase my limit.

Paying it down was still the right move. Paying in full is even better, whenever you can. Anyway nothing is guaranteed in the credit world.
I'm curious, why pay down was *right* move?
I can understand prolonged high utilization leading to AA, but if one month with maxed card happened to be end of the world, hardly anyone would have an open credit card.
1% (rounded) utilization is an exception, not real world standard.

As far as FNBO goes, I get it, they lowered some limits, but are their customers supposed to live in credit fear and manage their finances in a way that they think FNBO (or any other lender) would like or should person manage their finances in a way that benefits them personally?

I'm normally a very cautious person, takes me 1hr to cross a street, but I think this is exaggerating risk associated with short term, single card high utilization.

Paying down and keeping utilization low always looks better than high utilization. That's why I said it's the "right" move I guess. Of course, it's not absolutely necessary, especially if it's only going to be for one month.

Re: Target credit limits & high utilization

OmarGB9 — Tue, 31 Jan 2023 21:02:46 GMT

@Remedios wrote:
@OmarGB9 wrote:
@91173 wrote:
Just thought I'd post a follow-up. I ended up going to $1301 on the card. But right after I posted that, I was perusing the board and found a bunch of people complaining about FNBO slashing limits and closing cards. My second-oldest card is over 28 years old, and the issuer just switched to FNBO. I keep it around solely for the age, so I figured why give them a reason to close it because I went to 100% on a $1300 Target card?

So I ended up paying $1000 before my December statement cut so it only came in at $300. And now two statements later and my Target hasn't changed my limit. I imagine we will colonize Mars before they increase my limit.

Paying it down was still the right move. Paying in full is even better, whenever you can. Anyway nothing is guaranteed in the credit world.
I'm curious, why pay down was *right* move?
I can understand prolonged high utilization leading to AA, but if one month with maxed card happened to be end of the world, hardly anyone would have an open credit card.
1% (rounded) utilization is an exception, not real world standard.

As far as FNBO goes, I get it, they lowered some limits, but are their customers supposed to live in credit fear and manage their finances in a way that they think FNBO (or any other lender) would like or should person manage their finances in a way that benefits them personally?

I'm normally a very cautious person, takes me 1hr to cross a street, but I think this is exaggerating risk associated with short term, single card high utilization.