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Credit Limit Dillema

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cowboyguy
Regular Contributor

Credit Limit Dillema

I've been noticing a weird phenomena that I wanted to share with you guys.

 

When applying for new credit or CLI, lenders are giving me low CLs with the argument that I already have very high limit cards ($8,500 Chase SW, $7000 Freedom, $3000 Delta). They say when you alerady have high available credit, why on earth do you need high CLs...?

 

On the other hand, I've read everywhere on myfico that once you have some high limit cards, other lenders start matching your CLs and/or you could get high initial CLIs by going for reconsiderations and giving the argument that you already have high limit cards.

 

I've personally experienced both the above phenomenons. Aren't they contradictory?

Walmart Discover $10,000... Chase SW $8,500... Freedom $7,000... CSP $6,000... Amex Delta $3,000... Amex BCP $2,000... Local CU $1,500...
Message 1 of 7
6 REPLIES 6
LS2982
Mega Contributor

Re: Credit Limit Dillema

Its purely YMMV. Most of the time after approval if you were given a low CL with high limit cards in your file and your CRs are clean you can recon to a higher limit immediately after approval.



EQ FICO 548 3/3/16
Message 2 of 7
myjourney
Super Contributor

Re: Credit Limit Dillema

Next time they say that tell them: Well i was going to make a big purchase and wanted to put it on your card and watch what happensSmiley Happy

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 3 of 7
bs6054
Valued Contributor

Re: Credit Limit Dillema


@cowboyguy wrote:

I've been noticing a weird phenomena that I wanted to share with you guys.

 

When applying for new credit or CLI, lenders are giving me low CLs with the argument that I already have very high limit cards ($8,500 Chase SW, $7000 Freedom, $3000 Delta). They say when you alerady have high available credit, why on earth do you need high CLs...?

 

On the other hand, I've read everywhere on myfico that once you have some high limit cards, other lenders start matching your CLs and/or you could get high initial CLIs by going for reconsiderations and giving the argument that you already have high limit cards.

 

I've personally experienced both the above phenomenons. Aren't they contradictory?


Yes, they are contradictory, but I think that they happen at different points in the credit cycle, and obviously vary by lender.

 

I think the matching happens fairly early on, people here try to get one high-limit card, and other lenders (hopefully) follow.  But probably each lender has a vision of how much credit is enough, and when all your existing credit lines get near that figure, offered limits get smaller. In my case, the latest card, without any big change in my scores, is the Forward, with the lowest limit.  (And Citi probably looked at my other card with them in making that decision).

 

To me, it makes sense that lenders would do this.  A lot of credit is a potential risk, and if you really aren't using it, I might not make a profit on you anyway, so I will give you a small limit and if things look good, maybe a CLI will be in an order.

Message 4 of 7
Wolf3
Senior Contributor

Re: Credit Limit Dillema


@cowboyguy wrote:

I've been noticing a weird phenomena that I wanted to share with you guys.

 

When applying for new credit or CLI, lenders are giving me low CLs with the argument that I already have very high limit cards ($8,500 Chase SW, $7000 Freedom, $3000 Delta). They say when you alerady have high available credit, why on earth do you need high CLs...?

 

On the other hand, I've read everywhere on myfico that once you have some high limit cards, other lenders start matching your CLs and/or you could get high initial CLIs by going for reconsiderations and giving the argument that you already have high limit cards.

 

I've personally experienced both the above phenomenons. Aren't they contradictory?


The first argument is based on your income.  Your potential debt to income ratio would be too high for your income if you used most of your credit..

The second argument is about not giving high CL until you have some experience using your credit.

 

 

Message 5 of 7
7PM789
Frequent Contributor

Re: Credit Limit Dillema

 
Amex B.C.E. - $2.5k - Amex Everyday - $5k - N.C.F.C.U.M.C. - $5k - Amex Gold - NPSL/35k P.O.T. - Discover It - $12k - Sam's Club M.C. - $10k -
Walmart M.C. - $7.5k - Citi T.Y.P. - $10k- Chase Freedom - $5k - Chase Marriott - $7.4k - U.S. Bank Cash + - $6k -
W.M. TU-781(Jan/15) Citi EQ-782(Dec/14) EX-782(Oct/14)
Audi, Vide, Tace. . .
Message 6 of 7
FinStar
Moderator Emeritus

Re: Credit Limit Dillema


@Wolf3 wrote:

@cowboyguy wrote:

I've been noticing a weird phenomena that I wanted to share with you guys.

 

When applying for new credit or CLI, lenders are giving me low CLs with the argument that I already have very high limit cards ($8,500 Chase SW, $7000 Freedom, $3000 Delta). They say when you alerady have high available credit, why on earth do you need high CLs...?

 

On the other hand, I've read everywhere on myfico that once you have some high limit cards, other lenders start matching your CLs and/or you could get high initial CLIs by going for reconsiderations and giving the argument that you already have high limit cards.

 

I've personally experienced both the above phenomenons. Aren't they contradictory?


The first argument is based on your income.  Your potential debt to income ratio would be too high for your income if you used most of your credit..

The second argument is about not giving high CL until you have some experience using your credit.

 

 


+1 and bs6054's comments.

 

It all boils down to risk management.

Message 7 of 7
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