Reported balances vs starting limit

[SRT4kid93]

@BrutalBodyShots 

@Thomas_Thumb 

@Patient957 

@1lifeisworthit 

(Anyone else feel free to answer as well)

So lately I've been playing around a bit with allowing different balances to report. Then checking my Apple Card offer with different reported balances. (Since they tell you your starting limit before accepting the card)

with 1% reported utilization I was offered a $3000 starting limit. 

then I allowed my reported utilization to go up to 13% aggregate. And their offer went up to 10,000. 

my question is, at what aggregate utilization should I expect to start seeing diminishing returns? (I know each profile and situation is different but on average what should I expect)

for example, if I applied again with 80% aggregate utilization, do you think that would increase their offer further? Or hurt it? (Keep in mind I pay all my accounts in full every single month, so risk is low)

what if we changed the utilization from 80% to 50%, etc. at what point would higher utilization hurt me? Would it hurt me at all?

[Thomas_Thumb]

If you want the card, I'd take the $10k SL and run with it. 

As a general rule, utilization above 29% (particularly aggregate) represents elevated risk and score can drop significantly. A potential lower offer may be a NO offer. A steady, sharp, increase in AG UT over a "short" timeframe can also result in CLDs on other cards as experienced by SouthJamaica.

Note: risk is assessed based on reported balance/utilization and does not consider PIF - except for the card issuer that "sees" your PIF on their card(s).

[BrutalBodyShots]

Hey there @SRT4kid93. My take is that it has more to do with overall credit profile and how your perceived use (Transactor vs Revolver) of your existing revolving lines is moreso than actual utilization percentages. We know that utilization percentage alone doesn't dictate risk in and of itself. There are examples of people at 90%-100% utilization that are lesser risks than those at 20% utilization. Why? Because the 90%-100% person may be paying their statement balances in full monthly, where the person at 20% utilization may be carrying balances for months or years. Dollars of debt also need to be considered beyond just percentages as well. 

We don't know what the internal algorithm of the issuer/product you are speaking of looks at of course. I don't believe for a second though that it would only be looking at utilization percentages here and not how the actual balances on revolving lines are being used (responsibly or irresponsibly).

[Patient957]

---

@SRT4kid93 wrote:

my question is, at what aggregate utilization should I expect to start seeing diminishing returns? 

---

Who knows?  It would happen at some point.

As @Thomas_Thumb said, if you actually want the card, then take the $10K offer.  If you're just messing around collecting data, then by all means carry on.  You can answer your own question.  

[SRT4kid93]

@Thomas_Thumb 

Interesting, 

so what would be the best approach if I wanted to go from 1-2% utilization, to say 30-40%. (I would still be paying in full, I would simply allow larger balances to report)

it sounds like just letting the cards report higher balances quickly in 1 shot would be better than allowing the balances to "slowly increase to that 30/40% mark"

never really thought about that, I figured as long as you're paying in full. It really shouldn't matter. 

[Thomas_Thumb]

See the note I added above. IMO - Keep reported aggregate below 29%. A new lender/card issuer is unaware of your PIF status. They only see your utilization.

As far as AG UT is concerned, a repeated pattern of reporting a spike in UT up followed by a low AG UT suggests ability to pay but perhaps sub optimal cash flow or bill payment management. In contrast, a steady increase in UT may indicate insufficient cash flow to handle a significant increase in credit. Worse yet, a rapid, sustained build-up in combination with recent new accounts is a flag for "bust-out" fraud in the making.

We don't know each card issuer's internal algorithms but ... If one must speculate:

1. A stable Fico score is desireable.

2. A responsible (under 29%) reported aggregate utilization is preferred.

3. A slightly elevated aggregate utilization (say 10% - 19%) may get flagged as a potential candidate for apr revenue from balance carryover fees. (After checking reported income against aggregate CL; the algorithm may categorize the applicant as low risk with increased profit potential and boost SL).

[Vinjints]

I know it's not factual, but that speculation is very interesting to think about. Assuming your increased utilization doesn't drop your score out of a desired range, might be worth carrying a bit of a balance. 

[SRT4kid93]

Would you all consider 10k a good starting limit for the Apple Card?

what about in general?

[Thomas_Thumb]

It is a good starting point.

I know nothing specifically about how generous Apple is with CLIs or how frequently they can be requested.

[FicoMike0]

@SRT4kid93  nice experiment. It could be the dollar amount posted, rather than util %, that is driving the cl offered. Both 1% and 13% should be in the " no penalty" bin, so probably treated the same. On the other hand, if I were looking for good card client candidates, I'd choose one who posted $10,000 over one who posted $1000, if utilization was the same.