topic Re: What is the purpose of having a high CL when u never use it? in Credit Cards

What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 06:51:29 GMT

Has anyone ever used up most or all of thier $5k+ CL?

Everyone seems to be pushing for CL increases but how likely are you to use it? Are high CLs meaningless illusions? I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs. But will you ever get a chance to use it?

I pose this question beause many members seem to have the following characteristics:

1: To maintain low DTI most only charge 10% or less of their available credit lines. So a 10K CL will get used $1000;

2: There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing;

3: As TLs usage increases creditors could decrease limits;

4: Inactive TLs are now getting closed.

Some people shows multiple cards with high limits and yet they use only $500 a month. Where then is the value of having high CLs? Thanks for shedding some light...

Re: What is the purpose of having a high CL when u never use it?

indiolatino61 — Wed, 11 Dec 2013 06:55:43 GMT

@Fico2Go wrote:
Has anyone ever used up most or all of thier $5k+ CL?

Everyone seems to be pushing for CL increases but how likely are you to use it? Are high CLs meaningless illusions? I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs. But will you ever get a chance to use it?

I pose this question beause many members seem to have the following characteristics:

1: To maintain low DTI most only charge 10% or less of their available credit lines. So a 10K CL will get used $1000;
2: There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing;
3: As TLs usage increases creditors could decrease limits;

Some people shows multiple cards with high limits and yet they use only $500 a month. Where then is the value of having high CLs? Thanks for shedding some light...

It helps with your utilization percentage. Using $1,000 on a card that has a CL of $1,500 is far worse, credit scoring-wise, than using the same amount on a CL of $10,000. Plus, presumably higher CL attract higher limits from other lenders. Chase, for example, likes to see experience with $5K limits before approving the CSP. This varies, of course, but most people have posted this is often the case.

Re: What is the purpose of having a high CL when u never use it?

Swapmeet — Wed, 11 Dec 2013 06:55:49 GMT

Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.

Re: What is the purpose of having a high CL when u never use it?

myjourney — Wed, 11 Dec 2013 06:57:15 GMT

In case of emergency

Better to have than to have not

Re: What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 06:58:19 GMT

Hi IndioLatino.. cool name.

I understand what you mean by using High CL to lower DTC ratios. So let's assume you have five accounts with $5K each CL. Total available CL is 25K.

To keep the ratios low you can use only $2500.

There must be a better way. since there's 22.5K in wasted credit.

Re: What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 07:04:08 GMT

My Journey... I bet the credit companies know this all too well. They know that even if they grant CLs of $50K the accountholder will use no more than $10K.

And if that person uses more than 10K a domino effect begins to take hold.

AA for possible account closure;

Other creditors following suit;

interest rate goes up;

Seems all our hardwork to RECON and request for CLIs may not be all that useful if in fact we can't or wont be allowed to effectively use the it.

Shall I say a glass ceiling effect is in place?

Re: What is the purpose of having a high CL when u never use it?

indiolatino61 — Wed, 11 Dec 2013 07:07:01 GMT

@Fico2Go wrote:
Hi IndioLatino.. cool name.

I understand what you mean by using High CL to lower DTC ratios. So let's assume you have five accounts with $5K each CL. Total available CL is 25K.
To keep the ratios low you can use only $2500.

There must be a better way. since there's 22.5K in wasted credit.

Thank you for the compliment...lol. All this talk with percentages and the like only matter if you are going to app for more credit, as you want to maximize your credit scores prior to the app. The general "rule" for max FICO scoring is to have all of your cards report a zero balance (pay them all in full before the closing date) and let only one card report 1-9% and then PIF before the due date. Otherwise, there is not much benefit to micro-manage balances and dates. In your example, four cards would report $0 and the fifth card would report $50-$450. Contrary to what I had thought for many years, having all cards report $0 actually lowers scoring...it is best to show a balance on one card. Always PIF before the due date to avoid interest payments if at all possible.

Re: What is the purpose of having a high CL when u never use it?

CreditScholar — Wed, 11 Dec 2013 07:09:36 GMT

@Swapmeet wrote:
Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.

+1. It really depends on your lifestyle and spending habits, but for some the answer is definitely yes.

I just charged $1400 for dinner a few hours ago, so blowing through 5k is very easy. If my CLs were lower, I'd have very high util all the time. At that point my score would tank so for me yes, having higher CLs helps.

Re: What is the purpose of having a high CL when u never use it?

toppers555 — Wed, 11 Dec 2013 07:12:27 GMT

@Fico2Go wrote:
Hi IndioLatino.. cool name.

I understand what you mean by using High CL to lower DTC ratios. So let's assume you have five accounts with $5K each CL. Total available CL is 25K.
To keep the ratios low you can use only $2500.

There must be a better way. since there's 22.5K in wasted credit.

The 10% is for optimial points. Additional it shows you are capable and financially responsible.

Re: What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 07:14:16 GMT

If PIF is the case and objective in most cases then it's not much different from having say a PayPal debit card that pays 1.5% cashback. Only with credit cards u have almost two months float in some cases. Unfortunately the bottom line is you can't use most of your approve CL if u are always PIFing.

Re: What is the purpose of having a high CL when u never use it?

FinStar — Wed, 11 Dec 2013 07:17:38 GMT

@Fico2Go wrote:
Has anyone ever used up most or all of thier $5k+ CL? Yes, even higher.

Everyone seems to be pushing for CL increases but how likely are you to use it? Are high CLs meaningless illusions? Define "illusions" I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs. Everyone has different sets of financial goals But will you ever get a chance to use it? I know I do and have, will you if you get approved for something that high?

I pose this question beause many members seem to have the following characteristics: many is subjective, not everyone on this board would provide a true or meaningful statistical analysis since this forum only accounts for a very finite number of individuals, even those that report their usage in such fashion is a trivial percentage.

1: To maintain low DTI most only charge 10% or less of their available credit lines. So a 10K CL will get used $1000; I have used most if not a good portion of such a high CL and PIF.
2: There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing; The technology is already in place, the majority of lenders already have access to mid/off-cycle and real-time reporting data
3: As TLs usage increases creditors could decrease limits; Not necessarily, and this is only your theory - depends on so many factors from economic cycles to deteriorating portfolio performance, exit strategies etc.
4: Inactive TLs are now getting closed. This has always been the case for all lenders - nothing new. Some have policies that close inactive accounts earlier than others.

Some people shows multiple cards with high limits and yet they use only $500 a month. Where then is the value of having high CLs? Thanks for shedding some light...

The value is having the flexibility in purchasing power and reward programs and not having to worry about juggling multiple CCs to accommodate certain large transactions (i.e. airline tickets to overseas destinations, etc.). Serves as a great tool in the event any temporary emergency arises.

Re: What is the purpose of having a high CL when u never use it?

FinStar — Wed, 11 Dec 2013 07:16:21 GMT

@CreditScholar wrote:
@Swapmeet wrote:
Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.
+1. It really depends on your lifestyle and spending habits, but for some the answer is definitely yes.

I just charged $1400 for dinner a few hours ago, so blowing through 5k is very easy. If my CLs were lower, I'd have very high util all the time. At that point my score would tank so for me yes, having higher CLs helps.

Plus I assume CreditScholar dines in very fine establishments

Re: What is the purpose of having a high CL when u never use it?

myjourney — Wed, 11 Dec 2013 07:22:46 GMT

@Fico2Go wrote:
My Journey... I bet the credit companies know this all too well. They know that even if they grant CLs of $50K the accountholder will use no more than $10K.

And if that person uses more than 10K a domino effect begins to take hold.

AA for possible account closure;
Other creditors following suit;
interest rate goes up;

Seems all our hardwork to RECON and request for CLIs may not be all that useful if in fact we can't or wont be allowed to effectively use the it.
Shall I say a glass ceiling effect is in place?

Not so true some use there whole limits monthly and then PIF and risk no AA/FR or any other adverse effect

For sake off example company A has a card limit 50k uses 48k monthly PIF

Do you really think they want to lose that customer when you add what was spent plus swipe fees upwards of 576,000 a year

Because that much was spent doesn't mean that a balance will be carried.

Some use cards to finance making money again PIF

I have a buddy rehabs houses pays cash for the house dirt cheap

CC's to remodel and then sells all within a 30-45 day period

IMHO you need to broaden the way your looking at cards

Re: What is the purpose of having a high CL when u never use it?

yudeology101 — Wed, 11 Dec 2013 07:25:48 GMT

@FinStar wrote:
@CreditScholar wrote:
@Swapmeet wrote:
Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.
+1. It really depends on your lifestyle and spending habits, but for some the answer is definitely yes.

I just charged $1400 for dinner a few hours ago, so blowing through 5k is very easy. If my CLs were lower, I'd have very high util all the time. At that point my score would tank so for me yes, having higher CLs helps.
+2

Plus I assume CreditScholar dines in very fine establishments

very fine? More like SUPER fine establishments where the waitstaff would shine your shoes and stuff

Re: What is the purpose of having a high CL when u never use it?

09Lexie — Wed, 11 Dec 2013 07:25:57 GMT

@FinStar wrote:
@Fico2Go wrote:
Has anyone ever used up most or all of thier $5k+ CL? Yes, even higher.

Everyone seems to be pushing for CL increases but how likely are you to use it? Are high CLs meaningless illusions? Define "illusions" I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs. Everyone has different sets of financial goals But will you ever get a chance to use it? I know I do and have, will you if you get approved for something that high?

I pose this question beause many members seem to have the following characteristics: many is subjective, not everyone on this board would provide a true or meaningful statistical analysis since this forum only accounts for a very finite number of individuals, even those that report their usage in such fashion is a trivial percentage.

1: To maintain low DTI most only charge 10% or less of their available credit lines. So a 10K CL will get used $1000; I have used most if not a good portion of such a high CL and PIF.
2: There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing; The technology is already in place, the majority of lenders already have access to mid/off-cycle and real-time reporting data
3: As TLs usage increases creditors could decrease limits; Not necessarily, and this is only your theory - depends on so many factors from economic cycles to deteriorating portfolio performance, exit strategies etc.
4: Inactive TLs are now getting closed. This has always been the case for all lenders - nothing new. Some have policies that close inactive accounts earlier than others.

Some people shows multiple cards with high limits and yet they use only $500 a month. Where then is the value of having high CLs? Thanks for shedding some light...

The value is having the flexibility in purchasing power and reward programs and not having to worry about juggling multiple CCs to accommodate certain large transactions (i.e. airline tickets to overseas destinations, etc.). Serves as a great tool in the event any temporary emergency arises.

I also use my CL but because I do not like to pay interest, I PIF. The lenders are happy because they are getting fat off my swipe fees...and boy can I swipe.

You've mentioned your luv of using the PayPal Debit card for 1.5% cashback. Whike there is nothing wrong with having a cash back card, I achieve much more in return when I use my reward cc's.

Years ago, I might have been satisfied with cashback only but I like the perks and benefits of room upgrades, free baggage, seat upgrades, free airline tickets etc.

My file is thick do I'm not worried about lender being scared if I decide to have dinner with my friends CreditScholar and FinStar in SF for a few thousand.

With Amex and other lenders doing their random SP's they are well aware of my spending.

Re: What is the purpose of having a high CL when u never use it?

CreditScholar — Wed, 11 Dec 2013 07:30:36 GMT

@FinStar wrote:
@CreditScholar wrote:
@Swapmeet wrote:
Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.
+1. It really depends on your lifestyle and spending habits, but for some the answer is definitely yes.

I just charged $1400 for dinner a few hours ago, so blowing through 5k is very easy. If my CLs were lower, I'd have very high util all the time. At that point my score would tank so for me yes, having higher CLs helps.
+2

Plus I assume CreditScholar dines in very fine establishments

Well I do sometimes. It was a 2 Michelin star rated restaurant, although it was a bit of a disappointment. I don't think I'll be going back there anytime soon.

I'll be going to an even higher rated restaurant this weekend, so hopefully it'll make up for tonight and then some.

Re: What is the purpose of having a high CL when u never use it?

FinStar — Wed, 11 Dec 2013 07:33:39 GMT

@09Lexie wrote:
@FinStar wrote:
@Fico2Go wrote:
Has anyone ever used up most or all of thier $5k+ CL? Yes, even higher.

Everyone seems to be pushing for CL increases but how likely are you to use it? Are high CLs meaningless illusions? Define "illusions" I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs. Everyone has different sets of financial goals But will you ever get a chance to use it? I know I do and have, will you if you get approved for something that high?

I pose this question beause many members seem to have the following characteristics: many is subjective, not everyone on this board would provide a true or meaningful statistical analysis since this forum only accounts for a very finite number of individuals, even those that report their usage in such fashion is a trivial percentage.

1: To maintain low DTI most only charge 10% or less of their available credit lines. So a 10K CL will get used $1000; I have used most if not a good portion of such a high CL and PIF.
2: There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing; The technology is already in place, the majority of lenders already have access to mid/off-cycle and real-time reporting data
3: As TLs usage increases creditors could decrease limits; Not necessarily, and this is only your theory - depends on so many factors from economic cycles to deteriorating portfolio performance, exit strategies etc.
4: Inactive TLs are now getting closed. This has always been the case for all lenders - nothing new. Some have policies that close inactive accounts earlier than others.

Some people shows multiple cards with high limits and yet they use only $500 a month. Where then is the value of having high CLs? Thanks for shedding some light...

The value is having the flexibility in purchasing power and reward programs and not having to worry about juggling multiple CCs to accommodate certain large transactions (i.e. airline tickets to overseas destinations, etc.). Serves as a great tool in the event any temporary emergency arises.

I also use my CL but because I do not like to pay interest, I PIF. The lenders are happy because they are getting fat off my swipe fees...and boy can I swipe.
You've mentioned your luv of using the PayPal Debit card for 1.5% cashback. While there is nothing wrong with having a cash back card, I achieve much more in return when I use my reward cc's.
Years ago, I might have been satisfied with cashback only but I like the perks and benefits of room upgrades, free baggage, seat upgrades, free airline tickets etc.
My file is thick do I'm not worried about lender being scared if I decide to have dinner with my friends CreditScholar and FinStar in SF for a few thousand.
With Amex and other lenders doing their random SP's they are well aware of my spending.

Exactly. And she swipes with such fabulous style! I'd meet y'all in SF anytime! Plus, I want to see those new wheels soon!

Re: What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 07:36:07 GMT

Lexie... rewards whether baggage fees or seat upgrade or concierge services can be paid with cash too. So I'm not quite convince.. not yet a tleast.. that cash is inferior to rewards programs. Unless of course the value in rewards broken down as cost value exceeds that which cash could buy.

Some use cards to finance making money again PIF

I have a buddy rehabs houses pays cash for the house dirt cheap

CC's to remodel and then sells all within a 30-45 day period

Myjourney.. On your final comment "IMHO you need to broaden the way your looking at cards." Yes I am aware that CCs can be great substitutes for short term interest free loans. But there's also risks in doing so. I won't get too much into this but yes u are correct.

Re: What is the purpose of having a high CL when u never use it?

chwebb1 — Wed, 11 Dec 2013 07:37:10 GMT

When my BCE was still at $2800, I actually charged around $2000 to it in one month, and PIF before the statement cut. I never heard anything from Amex. I frequently get my Discover above 50% and I've never heard from them. I'll let 20-35% report on my Ring (the only card I let report a balance). I also got my BB&T card to $2000/2500. So I like having higher limits so if I need to spend money, I don't have to go scramble figuring out how to do it.

Re: What is the purpose of having a high CL when u never use it?

Fico2Go — Wed, 11 Dec 2013 07:46:18 GMT

Chwebb I am thinking and learning the best way to use CC for me is along the same line as u have described. Maybe 10% ratio is too little for me. When needed I could go up to 90% or all of the available balance as long as I can PIF at end of month. I dont think any creditor is going to shut down a good customer that pays them back on time. I would imagine that the scores could be managed in such a way that you will always have the highest scores when scores become needed.