@GatorGuy wrote:
@SoCalGardener wrote:
@GatorGuy wrote:You mention nothing about the most important factor is in my opinion, income.
Think of credit scores as getting you in the door. They help determine that you are credit worthy. However income and balances determine how much credit you can handle. Many lenders will limit the credit they extend as a proportion of your income.
The second important factor is usage. Some lenders want to see their current credit limits being used before giving you additional credit. This limits their risk unnecessarily. This will likely become more important as the economy slows down further.
I'm not sure I agree--or disagree--with your statement about the importance of income. Mostly I'm just confused on the whole topic!
My income nosedived after I was forced to retire early due to illness. I had planned on working AT LEAST another 20 years, if not more, but that went out the window. So I was stuck with just the SS I'd accrued up until then. My income now is embarrassing....certainly a far cry from the very healthy 6-figure income I used to make. But with all that said, here's the thing: even with my paltry income, I have high CLs (five figures) on almost all of my cards. All of them were acquired *after* retiring, so my previous big salary is not/has not been a factor.
Some of my biggest CLs are from banks that not only know my income, but also my assets/net worth, housing situation, etc. I believe those questions are optional, but I'm happy to answer them because they *definitely* improve my financial profile!
I do agree that usage is important, but even with that there's wiggle room. My utilization is much higher than normal right now, hovering around 30% overall, and as high as 81% on one card, yet that hasn't stopped any of the CLIs I've requested recently from being granted. So I don't know! Each of the banks that recently granted a CLI had my usage history--and payment history--to factor in to the decision, but still...
@SoCalGardener Of course I did not mean to imply that income is the only factor, or the end all be all. I just believe that it is the most important factor based off all my own experience as well as the many many data points I've seen here and as well as talking to people in finance.
I believe it also makes sense logically if you think about it. If you have two people with identical scores of 800 with identical credit profiles. One has an income of $100,000 and the other and income of $50,000, then the person with the higher income will likely receive a much higher credit limit. The higher your income the more likely you are to spend more, and also greater ability to repay higher amounts. If someone had an income of $50,000 do they need a credit limit of $100,000? They might be responsible since they have a high credit score and thus might not use it but then why even give them that limit in the first place?
Of course every credit profile and every institution is different. Income isn't the only factor that matters but just what I feel and have observed to be the most heavily weighted when related to CLs. But of course they still care about your balances, recent new accounts, relationship with the lender among other factors. And of course each institution weights all these things differently. Like in your case you mentioned being retired and on disability. Someone in that situation, their assets become much more important because you're likely living off part of your assets where someone younger and fully employed is building their assets and thus only living off part of their income. However at the end of the day we can never know for sure since we're not the ones making the decision.
Excellent points. 
And I knew you didn't mean income was the *only* factor, just one of them.
Luckily, I was absolutely driven when it came to socking away money for the future while I was working, so I'm now very comfortable, despite my involuntary early retirement. In a typical month, I don't need anything but my SS to cover everything--but when something big comes up, like my $100,000+ medical bills five years ago, I have money to tap into. I feel blessed to own my 7-figure home outright and be comfortable financially, all things considered.
@OmarGB9 wrote:
@SoCalGardener wrote:
@GatorGuy wrote:You mention nothing about the most important factor is in my opinion, income.
Think of credit scores as getting you in the door. They help determine that you are credit worthy. However income and balances determine how much credit you can handle. Many lenders will limit the credit they extend as a proportion of your income.
The second important factor is usage. Some lenders want to see their current credit limits being used before giving you additional credit. This limits their risk unnecessarily. This will likely become more important as the economy slows down further.
I'm not sure I agree--or disagree--with your statement about the importance of income. Mostly I'm just confused on the whole topic!
My income nosedived after I was forced to retire early due to illness. I had planned on working AT LEAST another 20 years, if not more, but that went out the window. So I was stuck with just the SS I'd accrued up until then. My income now is embarrassing....certainly a far cry from the very healthy 6-figure income I used to make. But with all that said, here's the thing: even with my paltry income, I have high CLs (five figures) on almost all of my cards. All of them were acquired *after* retiring, so my previous big salary is not/has not been a factor.
Some of my biggest CLs are from banks that not only know my income, but also my assets/net worth, housing situation, etc. I believe those questions are optional, but I'm happy to answer them because they *definitely* improve my financial profile!
I do agree that usage is important, but even with that there's wiggle room. My utilization is much higher than normal right now, hovering around 30% overall, and as high as 81% on one card, yet that hasn't stopped any of the CLIs I've requested recently from being granted. So I don't know! Each of the banks that recently granted a CLI had my usage history--and payment history--to factor in to the decision, but still...
I think in your situation it's your assets that are helping you, namely your seven (maybe even eight?) figure home. This is just my opinion, though.
Just seven.
Yes, I agree; I can't imagine banks giving me as high a CL as they have based solely on my paltry income. That's why I'm happy to answer those optional questions! They bolster my odds, big time.
