I have a secured cc that's about two months old, with a $500 cl. One of my credit reports said a negative factor is having cc under a $2000 cl. If I were to add, say, $1500 next fall, increasing my secured limit to $2000, could this backfire on me? Here's what I am concerned about:
I was planning on asking for an unsecured card after 1 year of on-time payments and utilization under 10%. I will have been out of bankruptcy for a ilttle over 1 year when I want to ask for the unsecured. But I'm concerned that if I add as much as $1000 or $1500 to my secured card, when it comes time to ask for it to be unsecured (the one year mark) they will be much more likely to say "no" because I have created my own, higher credit limit.
Does anyone have any thoughts or, better yet, experience with this?
On the one hand, it seems that puttng down more money and managing it well would be a plus and would show my responsibility. On the other hand, it might make me more of a credit risk to my credit union since my limit would be much higher. :/ I don't want to end up with $2000 secured and be stuck--not wanting to get my deposit back and lowering my credit limit.
Starting Score: TU 641 2/28/13 EQ 640 3/1/13
Higher limit is always better.
Even if they won't unsecure it. You will have an easier time getting credit from other lenders.
Add as much as you can. $5k is ideal.
I wouldn't mind trying to get up that high, but I'm worried about that money getting locked up in that card. I just wonder if it's more or less inevitable for them to unsecure my card with the same limit I create for it on my own. I'd had to have thousands of dollars secured, only three years later still being denied for an unsecured card at $3k and having to take the CL loss or have several thousand I can't touch. Then again...maybe I could look at it as an unorthodox savings account? idk, still....removing that money will hurt my numbers if they don't match it.
Thanks for the insight about it making things easier to get higher limits from other lenders. That's rational and reasonable.
The only reason it would "backfire" would be if you need that $1500 to pay other bills. Otherwise, you should definately do it. If the issuer has a policy where they unsecure cards after a period of time and, for some reason, decides that $2000 is too much to grant unsecured, they will offer a lesser amount when the time comes. Many banks don't unsecure a secured card. They will just tell you to apply again for an unsecured card. If this is the case, you are still better off having a larger amount in your secured account.
EX:694 TU:744 EQ:777It's through my credit union and they told me I could have it unsecured, but that the typical wait time was a year. I hope they told me correctly. As it's an area credit union, they seem much more inclined to help build credit--I also have a secured loan with them, and also a secured loan with my second credit union. Patience, I guess. 
I'll look into adding funds to it in the fall, when I have more to spare. Thanks!
@twall06 wrote:
Having a low limit credit card does not hurt your credit score. Limits i dont think matter that much . More about your utilization and on time payments .
Pretty much what I'm thinking. Saying a low credit limit is hurting your score sounds like they are struggling to find something to say.
The credit issuer is not bound to maintain your credit limit during the unsecuring process. So I wouldn't worry about the limit being too high.
Make sure you don't get a hard pull for the credit limit increase though. I would verify with the creditor first.
@boomhower wrote:
@twall06 wrote:
Having a low limit credit card does not hurt your credit score. Limits i dont think matter that much . More about your utilization and on time payments .Pretty much what I'm thinking. Saying a low credit limit is hurting your score sounds like they are struggling to find something to say.
Yeah, that could be it. It said something to the effect of "you have a credit card under a $2000 limit. Haivng credit cards with low limits suggests to lenders that you haven't had much experience managing larger amounts of credit, and therefore they may be less willing to extend more credit to you."
I could see it as having a higher limit is more helpful, as that's what I've read, due to it giving you a higher debt-to-credit ratio, but to say it's hurting me, that says a lot. In fact, once I opened the cc and secured loans, my score jumped up. idk. lol
@HiLine wrote:The credit issuer is not bound to maintain your credit limit during the unsecuring process. So I wouldn't worry about the limit being too high.
Make sure you don't get a hard pull for the credit limit increase though. I would verify with the creditor first.
Good idea! It seems they wouldn't do a HP if it was my own money, but then again, they did an HP to open one in the first place. They did, however, give me the option of putting down a larger amount, like $1000, but I don't know that that was my limit.