Credit Line Increase

[Anonymous]

I'm working on rebuilding my credit.  Long story short, due to a family emergency, I accumulated a lot of cc debit in 2007 and had quite a few missed payments. At one time, I had about 10 cc and a line of credit with BoA.  Due to late payments, all but one cc (Discover) was closed and charged off/paid in full.  Since 2016, I've opened three new cc: Credit One Visa and Mastercaed and Merrick Bank.  My UTI is:  CO Visa balance-$970 with a $1750 credit limit; CO Mastercard balance-$980 with a $1700 credit limit; Merrick-$2487 balance with a $2700 limit; Discover balance-$9297 with a $9500 limit.  Merrick has given more frequent CLI and CO automatically gave me CLI on both cards in April.  Since April, I have reduced my balance down quite a bit.  Discover has not given me a CLI in forever. I assume it is because my utilization rate is too high.  I've used the card a few times and paid for those small items when it posts and then my monthly payment is automatically made each month from my checking account.  I'm looking at buying a vehicle in the next several months, hopefully, so I want to pay more down on my balances.  While my utlization rate is high, my DTI is low...about 8% or so.  My questions are:  Would Discover grant me a CLI if I request it?  And is there a risk if I just pay my balances down versus charging small items to them each month? (i.e. if I don't charge anything, will they lower my limit or close the card).  I feel like Discover would not grant the request.  I've had that card forever and held a very high balance for a long time (I know, I know...I'm really kicking myself for charging more than I can pay for in a timely fashion).  That's the longest open credit account that I have and they have obviously worked with me, during the time when I had family issues going on.  They allowed me to set up automatic monthly payments, which was only supposed to be for 12 months, and here I am 13 years later still having the same payment automatically deducted from my checking account.  I clearly want to keep that card and want to be able to start using it occasionally when the balance gets substantially lower, so I don't want to ruin my relationship with them.   My FICO scores are 658/659 on all three bureaus.  My last late payment was six years ago.  One of those old cc accounts has dropped off of my reports and a couple more should drop off between now and December.  My overall utlization dropped a smidgen due to paying down some of my balances, but my EX score only went up 1 point since last month, which is frustrating.  I'm guessing the biggest issue with the verrrrry slow rise in my FICO scores is the high utlization rate????  Thoughts or advice?

[Remedios]

Honestly, I can see balance chasing here, because you're carrying a balance on that card for close to 15 years. 

With that said, they can close it at any time if they start feeling that account is never getting paid. 

Most lenders leave them open, as a psychological incentive to continue paying. 

I'd rather take CLD if one was to happen than have it closed if they feel like this isnt something you can dig yourself out of. 

CLDed card can grow again, closed account wont be reopened.

Also, at that amount, you're hemorrhaging money in interest. 

Pay what you can and let the chips fall where they may. 

[Anonymous]

You can request a Credit Limit Increase with Discover card online, it will not affect your credit score to request one, we cannot tell you whether you will get an increase.

As it turns out, your utilization probably is dragging your scores

I will say that data indicates "people who get credit limit increases tend to keep their “utilization” constant. In other words: If a person is carrying a $1,500 balance when they have a $3,000 credit limit, you’d expect them to start carrying a $4,000 balance if the limit is raised to $8,000." You may be at much higher risk of increased debt loads, especially with a recession.

[K-in-Boston]

I would definitely agree that balance chasing is a real possibility.  But that should not be a deterrent to paying the balances down.  To answer your scoring question, you are currently at 88% aggregate utilization and over 90% on two of your cards, which may very likely be costing you up to 100 points on your FICO scores compared to a small utilization amount!

I would stop using the Discover card (or any card with a carried balance) for any new purchases immediately.  You are paying more (assumed much more) in interest on your new charges than you are earning in rewards, as you have no grace period and new charges begin to accrue interest immediately.  I never like to suggest paying cash or debit, but with your current options, it is the best way to go.

I would focus on paying down the Merrick at least under 89% as soon as you can, and then throw anything you can toward the Discover each month while avoiding new charges on it.  Once the balance comes down on the Discover substantially, you may be eligible for a credit line increase which will help tremendously.  Once the balance is paid to zero, if you have a balance transfer offer on your Discover card, you can transfer the remaining balances to that card with a 3-5% fee or 4.99% promotional APR (offers vary and not everyone will get them, but if you do it would help you a lot) and stop the interest bleeding on the other cards.

[Anonymous]

Yes, I would definitely rather take the CLD versus a closed account.  Over the course of a few years, my oldest child was dx with cancer, developed kidney failure, had a transplant and was dx with a different cancer.  While we were fortunate to not have a lot of medical expenses (given all the occurred during that time), there were still some, plus the cost of gas and buying food, etc during long, extensive hospital stays and trips to the doctors. It takes no time to accumulate the debt, but it seems to take forever to pay it off.  My plan is to pay off my lower two cards, while making at least the minimum payment, if not a little more, on the other two.  Honestly, I don't want a CLI to charge more.  I want it to lower my utlization rate; however, I know a cc issuer won't necessarily look at it that way.  My other plan is to pay off the CO cards and get a cc through VACU and possibly transfer some of the balances from the other two cards. I hope by the time I get those two cards paid off, my FICO will increase more.  

[K-in-Boston]

Very sorry to hear about the circumstances.  FWIW paying down the two smaller cards will likely result in minimal or no change in scores; you are receiving very hefty penalties on the other two right now.  Score optimization shouldn't be immediate goal, of course, and if there is moral encouragement from paying down the smaller cards first, then certainly do that.

[Anonymous]

I've only charged minimal amounts on my cards , just out of fear that if I don't use it all, they'll close them.  By small amounts, I mean less than $20, and as soon as it posts, I pay that amount and use my debit card for everything else.  I know that may sound crazy, but I just worry that if they close them due to no usage, my utlization rate will be worse than it is now.  It was about 97% until this last month.  While the percentage is still high, I'm relieved that it is under 90% and it is certainly motivating me to continue to knock it down each month.  My plan was to continue to pay down the CO and do at least minimum for the other two.  But you think my next payment should be a big chunk to Merrick?  I have one CO that is due 6/5 and the rest are due 6/18(Merrick), 6/21(CO) and 6/23 (Discover).  I've already made partial minimum payments on all three of those.   CO and Merrick have lowest minimum payments ($55, $61 and $81) while Discover is $187.  The Discover is killing me, which I'm sure you've already figured out.  I've been torn as to which way is the best method to pay off these balances:  smallest balance first, knock them down to less than 80% one by one, higher interest rate first (ironically, that is Merrick and one of the CO).  Debt sucks!  I forgot to add that I do have a loan through VACU, which I did through my employer.  It's a small loan, $500.  I guess it's like a credit builder.  You can apply once every six months and as long as I'm employed and a member of the CU, I qualify and they don't do HP but do report to all three credit bureaus.  The loan is automatically taken out of my paycheck every two weeks and it should be paid off in the next month.  I may do another loan once this one is paid off and use that to pay towards one of the cc.  This will keep a good mix of credit on my account, since our mortgage is paid in full and our car loans are paid in full, and it will add to the relationship I have with the CU.

[flyingmd]

Highly unlikely youll get any CLI with that utilization. And as others have said, you may very well get balance chased. While there is no risk to your score for asking, I would stay off the radar, especially on Discover and not request until you get that balance almost paid off in full. Good luck!

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[Anonymous]

This makes sense and I completely agree because, until this month, my balances haven't decreased substantially...probably increased more once I got a CLI.  Obviously I have not been invested in my credit like I should have been.  I think I went so far down the rabbit hole that I had the mentality of, oh well, what's a few more charges on my card gonna hurt???  I think the other part is that I had more pressing stuff going on in my life, that great, or even good, credit if I'm being honest, was put on the back burner.  Now my goal is to get my balances down and my scores up.  I know it will happen in time.

[Anonymous]

I concur.  That was my other thought...if I ask, it will raise a red flag.  Thanks to everyone for your advice.  All of these are valid points and things I have thought about.  Sometimes it is nice to have others validate what you are thinking.  I think the other frustrating piece is that my scores jumped 17 points after the CLI two months ago, which was only $200/$250 on the CO cards.  I dropped my utlization to 88% by paying over $500 on my accounts this month and my EX only increased by 1 point.  (Clearly patience is not my thing).