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Does UW take into account your existing limits vs income for brand new relationship/apps?

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Anonymous
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Does UW take into account your existing limits vs income for brand new relationship/apps?

So this is something I thought about.

 

Speaking purely about new applications / new relationships (Never used the bank before) how will lenders will look at your existing limits to determine a SL. I wonder how they factor that into your income. Do they just look at utlization or both here? 

 

Seems to me you could have excellent credit but they will deny you saying your exposure (Existing limits) is too high. You could call and ask for CLD on exisitng cards and then maybe have a higher chance at approval. Almost like high limit cards could be a double edge sword if you want different cards down the road and lock you in.

 

I know some lenders will have a maximum exposure they are willing to extend but how does this apply to completely brand new relationships? 

 

Thoughts? Smiley Happy 

Message 1 of 6
5 REPLIES 5
FinStar
Moderator Emeritus

Re: Does UW take into account your existing limits vs income for brand new relationship/apps?


@Anonymous wrote:

So this is something I thought about.

 

Speaking purely about new applications / new relationships (Never used the bank before) how will lenders will look at your existing limits to determine a SL. I wonder how they factor that into your income. Do they just look at utlization or both here? 

 

Seems to me you could have excellent credit but they will deny you saying your exposure (Existing limits) is too high. You could call and ask for CLD on exisitng cards and then maybe have a higher chance at approval.

 

I know some lenders will have a maximum exposure they are willing to extend but how does this apply to completely brand new relationships? 

 

 


Algorithms make lending decisions for the most part, unless a 2nd step or manual review is required on the application.  Depending on the lender, each institution (whether it's a major bank, mid-size FSB, CU, etc.) will have certain criteria or guidelines.  But, by and large, they will weigh in all factors including your income and your CRs. Items like other open/used lines, your DTI, utilization, revolving history or patterns, etc.

 

Given adaptive risk models and the present lending environment, AI (built into most UW decision engines) typically make those decisions.

Message 2 of 6
jbestman007
Contributor

Re: Does UW take into account your existing limits vs income for brand new relationship/apps?


@Anonymous wrote:

So this is something I thought about.

 

Speaking purely about new applications / new relationships (Never used the bank before) how will lenders will look at your existing limits to determine a SL. I wonder how they factor that into your income. Do they just look at utlization or both here? 

 

Seems to me you could have excellent credit but they will deny you saying your exposure (Existing limits) is too high. You could call and ask for CLD on exisitng cards and then maybe have a higher chance at approval. Almost like high limit cards could be a double edge sword if you want different cards down the road and lock you in.

 

I know some lenders will have a maximum exposure they are willing to extend but how does this apply to completely brand new relationships? 

 

Thoughts? Smiley Happy 


I doubt that. The fact that other banks trust you with very high limits is a plus. Remember, they are viewing your "credit report"; showing how you manage credit. A history of responsibly managing high credit limits has to be a positive, in my opinion. Still, different banks, different criteria. 


Message 3 of 6
FalconSteve
Valued Contributor

Re: Does UW take into account your existing limits vs income for brand new relationship/apps?

UW takes into account existing debt, not limits, when determining DTI or utilization obviously. I've never had a high limit hurt me and my Dad is... was a mortgage officer and he never dealt with this issue when getting people approved. I think this is mostly an old wives' tale.

1/8/17 Discover $18300 CL- $1k SL- AU, wife
1/26/20 AmEx Cash Magnet $35k CL, wife
2/19/20 BB&T/Truist Rewards $11k SL- impulse application
2/22/20 Citi Double Cash WEMC $2.9k-->$4.4k-->$8.4k-->$13.4k-->$17.4k-->$19.4k-->$22.4k AU, wife
3/8/20 Wells Fargo Propel AmEx/Autograph VISA $2900-->$3200-->$5000-->$8800 CL- AU, wife
3/9/20 Truist Rewards $11k SL- AU, wife- impulse app
3/21/20 REDcard MasterCard (TD Bank) $2500-->$6000-->$6500 CL
11/24/20 AmEx Cash Magnet $10k SL-->36hr-->$20k-->$35k CL
6/10/21 SoFi World Elite MC (TBOM) $7000 SL
1/19/22 AppleCard/GS $6k-->$10k-->$11k AU, wife
8/15/22 Chase freedom flex $10.3k SL-->$12.5k-->$15k AU, wife
7/5/23 Lowes/Synchrony $4k-->$10k-->same day-->$35k CL
8/2/23 Chase freedom flex $19k --> $22.8 CL
8/2/23 Discover $8k SL
Message 4 of 6
FinStar
Moderator Emeritus

Re: Does UW take into account your existing limits vs income for brand new relationship/apps?


@FalconSteve wrote:

UW takes into account existing debt, not limits, when determining DTI or utilization obviously. I've never had a high limit hurt me and my Dad is... was a mortgage officer and he never dealt with this issue when getting people approved. I think this is mostly an old wives' tale.


Can you clarify the bolded statement?  The OP isn't applying for a mortgage and CC UW differs quite a bit from mortgage UW where addional factors and criteria are considered.

 

If you are referring to higher limits, it will really depend on where you'd be applying.  For instance, someone with $500K TCL (inclusive of high limits) would have a challenging time getting approved for a variety of fairly conservative lenders, such as FirstTech FCU, than someone having around $100K TCL in aggregate.  

Message 5 of 6
coldfusion
Community Leader
Mega Contributor

Re: Does UW take into account your existing limits vs income for brand new relationship/apps?


@jbestman007 wrote:

@Anonymous wrote:

So this is something I thought about.

 

Speaking purely about new applications / new relationships (Never used the bank before) how will lenders will look at your existing limits to determine a SL. I wonder how they factor that into your income. Do they just look at utlization or both here? 

 

Seems to me you could have excellent credit but they will deny you saying your exposure (Existing limits) is too high. You could call and ask for CLD on exisitng cards and then maybe have a higher chance at approval. Almost like high limit cards could be a double edge sword if you want different cards down the road and lock you in.

 

I know some lenders will have a maximum exposure they are willing to extend but how does this apply to completely brand new relationships? 

 

Thoughts? Smiley Happy 


I doubt that. The fact that other banks trust you with very high limits is a plus. Remember, they are viewing your "credit report"; showing how you manage credit. A history of responsibly managing high credit limits has to be a positive, in my opinion. Still, different banks, different criteria. 


As a corollary to @FinStar's post just before this one,  there is in fact a good amount of emperical evidence that some lenders like FirstTech CU do in fact deny applicants on the basis of already having "sufficient" unsecured credit extended from other issuers.   UMB is another issuer that has been known to do this, there was a thread started on the forum a couple of days ago from a member who was denied for a card for this very reason.

(3/2024)
FICO 8 (EX) 846 (TU) 850 (EQ) 850
FICO 9 (EX) 850 (TU) 850 (EQ) 850

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Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 6 of 6
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