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Starting SL based on average CL?

Regular Contributor

Starting SL based on average CL?

I want to have an unnecessarily high number of cards (it's a dumb hobby but I enjoy it) but I also don't want to have all of those smaller limit cards bringing down my potential to be granted higher SLs on cards I need a lot of room on. Having higher limits granted on cards is a bigger priority for me because I access those credit lines to pull out cash on real estate investments (you almost always get a better deal closing cash) and then either selling quick or doing a cash-out refinance on the house later on the business credit. I'm not to the level where I have huge non-card lines of credit yet, so it's nice to develop multiple tools in the belt. 

 

What do you guys know about the effect your average CL is on an issuer's SL. What if theoretically, I had 5 cards with over $30k limits, but also had smaller cards and my average credit line per card, as a result, was much lower, say only $10k. I know Amex likes to at least match your highest card but what about in general, or with other lenders?

 

-Glenn

 

{Cap1 Quicksilver: $850} {Discover It: $2.2k} {Amex BCE: 20k} {Wells Fargo Cash Wise: $6k} {Sam's Club Credit: $967} {Barclaycard Ring: $750} {Chase Slate: $14.2k} {Wal-Mart MC: $7.9k} {Chase Amazon: $1.3k} {Target RedCard: $800} {AU on BofA card: $15k} {Sams MC $2.4k} {US Bank Cash+ $7.2k} {BofA Business Cash Rewards $5.5k} {Citi DC $8.1k} {Uber Visa $3.6k} {USAA Cash Preferred $2k} {NFCU somethin card $3.9k} {Alliant CU somethin card $7,500} {Lowe's MC $3.0k}
Message 1 of 10
9 REPLIES
Super Contributor

Re: Starting SL based on average CL?

Lots of factors at play, so it's very profile-specific IMO.  Income, overall exposure and individual (by lender) exposure can be a factor as well. 

 

Higher limits can both work for you and work against you.  Take your 5 cards with $30k limits example.  One lender may feel they can match your bigger limits and throw you a $30k SL.  Another (Discover comes to mind) that likes to be your #1 priority may see the multiple larger lines already and figure they don't want to try and compete and as a result hand you a small SL.  It really can go either way depending on your profile and what the lender you are interested in is looking for when they check out your file.

Message 2 of 10
Senior Contributor

Re: Starting SL based on average CL?

Seems to me to be a quick trip to disaster as far as your credit report and overall credit picture. I have many cards with CL's of $20k + my wife has a bunch more, between us we have about $640k in revolving credit - almost all is with bank cards that offer cash options. I would never max out 2 3 4+ cards or carry maxed out balances on them for a "quick investment" even if the deals never went south or say unexpected delays. 

 

First off there is an average 3% cash advance fee ($4500 on $150k), second many lenders don't like cash advances and will watch your credit report closing before they AA it or add a red flag - I don't know of any major lender that if they looked at a customer's overall credit and saw 3 or 4 or 5 cards all take $30k cash advances at the same time that would not cancel or "fraud hold" your account, add to that at say a 20% APR minimum (cash advances typically have higher APR's) you'll pay $5600 in interest on that $15k per month so if you "only use" the cash advance for 1 month you are paying over $11,000 for that privledge (two months $15,700). Cash advances, high balances, high utility all equal major hits to one's credit report (you'll go from 750 to 600 real quick). 

 

If you have a successful business, consider a bank bridge credit line that "expects" money to come out and get paid back in short order, if you can justify your business to a commercial lender, that's a much better way to go. If you currently own a home or two, perhaps a home equity line of credit for say $100k might work too. 

 

Edit: OP I know that is not your specific question, but I think that's where you are looking. 

Message 3 of 10
Regular Contributor

Re: Starting SL based on average CL?


pipeguy wrote:

Seems to me to be a quick trip to disaster as far as your credit report and overall credit picture. I have many cards with CL's of $20k + my wife has a bunch more, between us we have about $640k in revolving credit - almost all is with bank cards that offer cash options. I would never max out 2 3 4+ cards or carry maxed out balances on them for a "quick investment" even if the deals never went south or say unexpected delays. 

 

I don't use cash advance options. You are right those are prohibiively expensive. I have a few options to get cash from cards. I have a few legitimate businesses, all related to different aspects of Real Estate. I simply swipe an amount into one of my owned business merchant account using Square or another CC processor for my business. The purchase is an investment into my business,  legitimate seperate legal entity, and of course the CC company gets it's transaction fee. So I pay 2-3% to do this BUT it's much cheaper than using Hard money loans which cost around 5% up front and 7-12% apr in interest. Once I have more time in the field I'll start getting actual lines of credit with and cut out the plastic middleman lol.

 

Edit: Also, usually the cards I extract cash from are 0% interest ones. Takes about 6 months to reliably flip a property or get it rented out and complete a cash out refinance. You're also right to not want to use your credit cards involved in risk. But any sort of financing would carry risk of losing money. At least with the cards there is the 0% interest to make things easier.

 

If you have a successful business, consider a bank bridge credit line that "expects" money to come out and get paid back in short order, if you can justify your business to a commercial lender, that's a much better way to go. If you currently own a home or two, perhaps a home equity line of credit for say $100k might work too. 

 

Oh I can justify it... But banks are extremely hard to get REI loans unless you've been flipping houses for 2 years. You have to get to a certain level of success before theyll give you commercial loans and you need business tax returns for your last year which if you're IN your firsr year or two you haven't gotten that far yet. It's kind of a double edged sword. Or they wanna securitize them with assets which is weird because the house you are buying IS an asset. Also you don't want to try and go the conventional mortgage route because another real estate investor comes along and offers a 2 week cash close and beats your 45-day close offer out of the park. Cash is king in this world. There's a lot of competition in REI. But back to the REI loans thing I think it's somewhat similar to the idea that some job fields wanting somebody with experience but you can't get experience because they won't hire you! lol...

 

Edit: OP I know that is not your specific question, but I think that's where you are looking. 

 

I appreciate your input, the main question was whether cards with lower limits detracts from having cards with higher limits, and the SL of new cards being affected by those smaller cards. You kinda answered that too though, I can see it being lender specific. Was just seeing if there was a general protocol. 


 

{Cap1 Quicksilver: $850} {Discover It: $2.2k} {Amex BCE: 20k} {Wells Fargo Cash Wise: $6k} {Sam's Club Credit: $967} {Barclaycard Ring: $750} {Chase Slate: $14.2k} {Wal-Mart MC: $7.9k} {Chase Amazon: $1.3k} {Target RedCard: $800} {AU on BofA card: $15k} {Sams MC $2.4k} {US Bank Cash+ $7.2k} {BofA Business Cash Rewards $5.5k} {Citi DC $8.1k} {Uber Visa $3.6k} {USAA Cash Preferred $2k} {NFCU somethin card $3.9k} {Alliant CU somethin card $7,500} {Lowe's MC $3.0k}
Message 4 of 10
Established Contributor

Re: Starting SL based on average CL?

I cannot say that my lower limit cards have ever really caused a problem. I think it depends on the bank really. One bank approved me for $5,000 when my highest reporting card was $500. While another approved me for $15,000 when my highest limit card was $10,000 and lowest was $500.

 

I have opened accounts that seem to want to match my lowest limit cards though.

AAOA 15 months Fico 08's 714 717 678 11% Utilization
Message 5 of 10
Valued Contributor

Re: Starting SL based on average CL?

As an aside.. Be careful using Square to cash-out.... Ditto for using an Amex as the vehicle for a cashout. Both are known to close accounts for using your merchant account for pseudo-cash-advances... from your personal cards....

 

Creditaddict can tell you all about Amex and making payment to one of his buisnesses with it...

 

Message 6 of 10
Senior Contributor

Re: Starting SL based on average CL?

This is senseless because ANY hard money lender will get you cash in 2 hours for a cash closing.  Even on weekends.

 

I work with hard money lenders who don't even ask me for a contract, they just literally wire up to $100,000 into my checking account 24/7/365 if I have an apartment I want to offer a cash deal on.  I pay them back quickly but if I want to finance it over 2 years, the interest rate is way lower than any cash advance on a card.

 

I've gotten hard money loans for less than 3% for up to 60 days, too.

Message 7 of 10
Moderator

Re: Starting SL based on average CL?


ABCD2199 wrote:

This is senseless because ANY hard money lender will get you cash in 2 hours for a cash closing.  Even on weekends.

 

I work with hard money lenders who don't even ask me for a contract, they just literally wire up to $100,000 into my checking account 24/7/365 if I have an apartment I want to offer a cash deal on.  I pay them back quickly but if I want to finance it over 2 years, the interest rate is way lower than any cash advance on a card.

 

I've gotten hard money loans for less than 3% for up to 60 days, too.


Better have the cash to pay these folks or bad things do happen lol..  Hard money lenders scare the hell out of me, but they serve a purpose for people that can't get a normal loan due to credit or whatever that case might be, but to scary for me to ever use.  Never have had the need I suppose either

Chase | Citibank | Amex | BofA | PenFed | NFCU | Discover | Barclay's | US Bank | Fifth Third Bank | FNBO
Message 8 of 10
Regular Contributor

Re: Starting SL based on average CL?


ABCD2199 wrote:

This is senseless because ANY hard money lender will get you cash in 2 hours for a cash closing.  Even on weekends.

 

I work with hard money lenders who don't even ask me for a contract, they just literally wire up to $100,000 into my checking account 24/7/365 if I have an apartment I want to offer a cash deal on.  I pay them back quickly but if I want to finance it over 2 years, the interest rate is way lower than any cash advance on a card.

 

I've gotten hard money loans for less than 3% for up to 60 days, too.


Well, apparently you've found way better hard money lenders than I have at this point! And I've definitely searched around. I'm sure I'll have similar opportunities as that at some point but right now the best rates I've been able to find in my area were the at the %s I mentioned. I never want to have to rely on ONE option for financing. It's best to have multiple. 

 

Again, I don't pay the cash advance fees. I run the CC through a business as an investment purchase and get cash out that way from the business' checking account. So I'm paying transaction processing fees, and 0% interest on the cards because I utilize the free interest periods. If I have 3 or 4 cards at any given time with 0% periods I effectively have a decent cash line of credit basically with no interest. 

 

I think we got a little sidetracked though. The point of this topic was to see if having smaller limit cards mixed in with higher limit cards hurts you when it comes to the SLs on new cards.

{Cap1 Quicksilver: $850} {Discover It: $2.2k} {Amex BCE: 20k} {Wells Fargo Cash Wise: $6k} {Sam's Club Credit: $967} {Barclaycard Ring: $750} {Chase Slate: $14.2k} {Wal-Mart MC: $7.9k} {Chase Amazon: $1.3k} {Target RedCard: $800} {AU on BofA card: $15k} {Sams MC $2.4k} {US Bank Cash+ $7.2k} {BofA Business Cash Rewards $5.5k} {Citi DC $8.1k} {Uber Visa $3.6k} {USAA Cash Preferred $2k} {NFCU somethin card $3.9k} {Alliant CU somethin card $7,500} {Lowe's MC $3.0k}
Message 9 of 10
Community Leader
Senior Contributor

Re: Starting SL based on average CL?


GlennTheAgent777 wrote:

ABCD2199 wrote:

This is senseless because ANY hard money lender will get you cash in 2 hours for a cash closing.  Even on weekends.

 

I work with hard money lenders who don't even ask me for a contract, they just literally wire up to $100,000 into my checking account 24/7/365 if I have an apartment I want to offer a cash deal on.  I pay them back quickly but if I want to finance it over 2 years, the interest rate is way lower than any cash advance on a card.

 

I've gotten hard money loans for less than 3% for up to 60 days, too.


Well, apparently you've found way better hard money lenders than I have at this point! And I've definitely searched around. I'm sure I'll have similar opportunities as that at some point but right now the best rates I've been able to find in my area were the at the %s I mentioned. I never want to have to rely on ONE option for financing. It's best to have multiple. 

 

Again, I don't pay the cash advance fees. I run the CC through a business as an investment purchase and get cash out that way from the business' checking account. So I'm paying transaction processing fees, and 0% interest on the cards because I utilize the free interest periods. If I have 3 or 4 cards at any given time with 0% periods I effectively have a decent cash line of credit basically with no interest. 

 

I think we got a little sidetracked though. The point of this topic was to see if having smaller limit cards mixed in with higher limit cards hurts you when it comes to the SLs on new cards.


IME, no.  Then again, depends on a case by case basis, the lender, and your overall profile/income sources.  I'll cite a couple items as an example: Lowest CL $3K Von Maur.  Highest CL $133K Capital One.  Next top CL is $85K UNFCU.  SL approvals can range from $15K to $35K (post-verification with very few requiring POI/Tax Statements).  Most recent auto-approval (Dec 2017), NAVY $20K More Rewards AMEX.

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