Credit Line Question

[Anonymous]

So I am in college and got my first card in Decebmer. It was the Discover it Chrome for students 500SL but got it to 1000 two months ago. I also got the capital one journey card two weeks ago for 300 Sl. I also got the Bank of America Cash Rewards the other day 500 SL. I know some creditors do automatic credit limit increases. Is there a way I can stop them from doing automatic CLI? Or would I have to ask to decrease it when the auto CLI?  I don't need any more credit. 1.8K is plenty for a junoir in college and I wont want any more. I just want to garden with this limit untill i graduate college. Thank you for helping me get my credit journey going.

[Anonymous]

You can always ask for a CLD (credit limit decrease)!  It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting.  If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month.  If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for.  If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards.  When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

[Anonymous]

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@Anonymous wrote:

You can always ask for a CLD (credit limit decrease)!  It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting.  If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month.  If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for.  If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards.  When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

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Thank you ill check it out. I also have an excel sheet. I have all my bills listed on it, the due dates, when I clicked the pay button and when they got the payment. My landlord will report when I move in in august so that will help. I know BOFA is stingy and heard them close accounts because peolpe have too much credit. I plan to swtich to BOFA after school because Im starting to hate WF.

[Anonymous]

I understand that you are trying to limit your exposure to open credit lines to remain disciplined, but if you can manage higher limits they are definitely beneficial. The only time I recommend CLDs or keeping low limits is when a person cannot handle having a high amount of open credit (meaning, they impulse buy and over-spend). 

It seems like you're disciplined enough to handle the higher limits, you're young but already keeping a budget and spreadsheet. I'd recommend letting the auto-CLIs go through to help with utilization if a balance shows on a statement, to help future applications (some banks like to see that you have a history of handling high limit cards before giving you a premium card - Chase is known for this), and to have in case of emergencies. I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

Best of luck with your credit journey!

[Anonymous]

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@Anonymous wrote:

I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

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This is so so so true.  I lived on debit cards for the past 5 years of being in the FICO trash pile and more than once I had an issue while traveling -- not an emergency, but an opportunity.  I couldn't take advantage of some of them because all my debit cards had a daily spend limit and the opportunity cost more than my daily spend limit so I had to pass.  Had I had ONE credit card with a gigantic limit, I could have used it, taken advantage of the amazing offer, and then paid it in full from checking once it posted.

It's frustrating to think that my own bad management of debt made me miss out on some fantastic deals!

If you track spending discretely and manage your spreadsheet, I bet you can also manage high limits.  Just pretend they're smaller ones, or live by the "don't go over XX% utilization" mantra that I do.

I won't spend the money if it means that credit card will ever report more than an 8% utilization.  Right now I really want to book a vacation deal but I won't be able to pay that CC down to 8% before the statement closes on the 23rd, so I am patiently waiting for the 24th to roll around!  If my credit limit was double where it is today, I'd book it right now.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I've had a few occasions where I'm on the road without much cash (and no ATMs) and I need a new tire or car repair. Having a large credit limit can really help with these emergency expenses and remove some of the stress of freaking out because you're trying to figure out how you are going to come up with X$ in cash. Of course, even these emergency expenses should be PIF whenever possible.

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This is so so so true.  I lived on debit cards for the past 5 years of being in the FICO trash pile and more than once I had an issue while traveling -- not an emergency, but an opportunity.  I couldn't take advantage of some of them because all my debit cards had a daily spend limit and the opportunity cost more than my daily spend limit so I had to pass.  Had I had ONE credit card with a gigantic limit, I could have used it, taken advantage of the amazing offer, and then paid it in full from checking once it posted.

It's frustrating to think that my own bad management of debt made me miss out on some fantastic deals!

If you track spending discretely and manage your spreadsheet, I bet you can also manage high limits.  Just pretend they're smaller ones, or live by the "don't go over XX% utilization" mantra that I do.

I won't spend the money if it means that credit card will ever report more than an 8% utilization.  Right now I really want to book a vacation deal but I won't be able to pay that CC down to 8% before the statement closes on the 23rd, so I am patiently waiting for the 24th to roll around!  If my credit limit was double where it is today, I'd book it right now.

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ABCD2199, Is there a way to add loans to your credit spread sheet?

[Anonymous]

Sure thing!  I am trying to figure out the best way to do that, but I will start something up today!  Thanks for the idea.

[SouthJamaica]

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@Anonymous wrote:

You can always ask for a CLD (credit limit decrease)!  It's responsible of you to want to manage credit as well as possible but keep in mind that those credit limit increases (CLIs) can help you with utilization reporting.  If you have a $1000 credit limit and report $400 on month but pay it off, it still reports as 40% utilization which hurts your FICO scores that month.  If they automatically increase you to $2000 and you report $400, you only show 20% utilization!

Also keep in mind that credit limits work as "prybars" for future credit applied for.  If you graduate with $5000 credit limits and are ready to get some prime rewards cards, having high credit limits will GENERALLY get you high credit limits on new cards.  When you're in the work world, having high credit limits will let you report lower utilization and maximize rewards spending for cash back!

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I don't think you should do anything like that. If they grow they grow. There's no law that says you have to use any of it.

[EAJuggalo]

What is being with one of those big banks doing for you?  Why don't you start a relationship with a good Credit Union?  They generally get you much more for you money and will have much better interest rates for those big purchases.

[Schwartzinator]

I entered college 3 years ago with just a debit card to make all of my purchases. At the time, it sounded good to only purchase what I could pay off that month but I had no understanding of what a credit score really was much less what went into it. As others have mentioned, the purpose of a large limit isn't necessarily meant to promote spending more money, but rather to pad your score when utilization is calculated. The fact that you recognize the temptation of a higher limit and are proactively looking for ways to keep your bank account(s) safe means you're definitely on the right track! I am personally hoping to graduate next May with scores all above 780 and credit lines totalling $50,000 not because I have any intention of running up that kind of balance but because it provides plenty of breathing room during monthly cycles.