Help me understand the buzz behind CLI's

[lhcole77]

In my experience, high CLs beget high CLs. 

I do not always PIF. And I do not subscribe to the notion that only savvy credit people do. My strategy has been working very well for years. Having great 0% offers allows me to borrow money, nearly fee free, for almost 2 years at a time. That, in turn, allows me to do some pretty amazing things, personally and financially.

Having high CLs allows me to not worry ONE LITTLE BIT about UTL. The payoff there, for me, is that I continually score Very Good or Exceptional in amount owed in FICO scoring.

FWIW, I was able to negotiate a lower monthly lease (by almost 10%) on my new apartment based in part to my "outstanding credit profile" and "amazing credit limits provided by my lenders" (property management's words, not mine).

[axlm]

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@Anonymous wrote:

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@longtimelurker wrote:

While I think they are really overstressed here, having to pay multiple times a month is a good reason for getting a CLI!    Financially (and not scorewise) the best strategy is to pay just once, on the due date.   Anything else is wasting a key feature of the credit card, the interest free float.    And then, having a balance that is only a fairly small part of the CL is OK for scoring too.

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I pay multiple times a month because I want to, not necessarily because I must.  Why is it financially the best strategy to pay once?  If you charge 500 essentially no difference between paying 500 on the due date or paying 250 before it or vice versea. 

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You missed a key part in there: "best strategy is to pay just once, on the due date". Because you are using the lender's money, interest-free, for longer.  Meanwhile your own money is (hopefully) giving you some extra return over that period.

[Anonymous]

Lol well that escalated quickly . OP I totally understand your point. I'm in rebuild status so even getting a $250 auto CLI is incredibly exciting to me. I'm also puzzled by those that have so many credit cards and thousands upon thousands of dollars in limits but amazing credit scores so obviously their UTIL is low so why do they need so much? LOL, well maybe because they can. Maybe they think they need it, and maybe they just get satisfaction from getting those CLI's because hey, it's like getting an A on a paper in a class you're already acing or getting another raise at work: it's HARD to obtain and maintain the level of credit worthiness in America it would take to not only get those high limits but also to continue to use credit responsibly enough to maintain that low utilization. In the end, this one forum gets soooo much more traffic than any other subject. I can go all afternoon and no one will post anything on the mortgage threads but this one is always always lit up.

I think the answer to your question is that they can, it makes them feel good in some way, and they are obviously mostly managing it correctly so they aren't seeing hits to their credit. Also, I'll be honest: I think it's a little elitist as well. If someday I can rebuild to be able to manage high limits in a responsible way, after what I've been through with my credit, hey, I'll join the "elite" as well .

[kdm31091]

Its a given that everyones income and spend are different. However, to take that further, then why should we have any discussion about any of this stuff? If everyones different, what does it matter?

I think this is a viable discussion. Nothing wrong with sharing our opinions on it

[Anonymous]

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@axlm wrote:

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@Anonymous wrote:

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@longtimelurker wrote:

While I think they are really overstressed here, having to pay multiple times a month is a good reason for getting a CLI!    Financially (and not scorewise) the best strategy is to pay just once, on the due date.   Anything else is wasting a key feature of the credit card, the interest free float.    And then, having a balance that is only a fairly small part of the CL is OK for scoring too.

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I pay multiple times a month because I want to, not necessarily because I must.  Why is it financially the best strategy to pay once?  If you charge 500 essentially no difference between paying 500 on the due date or paying 250 before it or vice versea. 

---

You missed a key part in there: "best strategy is to pay just once, on the due date". Because you are using the lender's money, interest-free, for longer.  Meanwhile your own money is (hopefully) giving you some extra return over that period.

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I get this in theory, but in practice?  Let's assume geo has a 1500 dollar credit bill from Chase.  Most of us are paying our credit cards from our primary checking account I'll assume.  If geo pays 1500 on due date or 750 on say the 15th and the due date what is the opportunity cost of that extra 750 in a checking account?  How in real terms are people "profiting" by only paying once. 

[Anonymous]

For the low total CL it is a question of utilization ratio.

If utilization ratio is not an issue than it is just a game "more the better".

[Anonymous]

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@lhcole77 wrote:

In my experience, high CLs beget high CLs. 

I do not always PIF. And I do not subscribe to the notion that only savvy credit people do. My strategy has been working very well for years. Having great 0% offers allows me to borrow money, nearly fee free, for almost 2 years at a time. That, in turn, allows me to do some pretty amazing things, personally and financially.

Having high CLs allows me to not worry ONE LITTLE BIT about UTL. The payoff there, for me, is that I continually score Very Good or Exceptional in amount owed in FICO scoring.

FWIW, I was able to negotiate a lower monthly lease (by almost 10%) on my new apartment based in part to my "outstanding credit profile" and "amazing credit limits provided by my lenders" (property management's words, not mine).

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I put in the OP that 0% offers can lead to strategies (and I've used them) where it makes sense.  I should have put credit savvy users won't pay any interest by paying in full and/or having balances on cards with 0%.  I understand them much more from your point of view and attempted to address that in my first post. 

[mitchblue]

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@Anonymous wrote:

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@axlm wrote:

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@Anonymous wrote:

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@longtimelurker wrote:

While I think they are really overstressed here, having to pay multiple times a month is a good reason for getting a CLI!    Financially (and not scorewise) the best strategy is to pay just once, on the due date.   Anything else is wasting a key feature of the credit card, the interest free float.    And then, having a balance that is only a fairly small part of the CL is OK for scoring too.

---

I pay multiple times a month because I want to, not necessarily because I must.  Why is it financially the best strategy to pay once?  If you charge 500 essentially no difference between paying 500 on the due date or paying 250 before it or vice versea. 

---

You missed a key part in there: "best strategy is to pay just once, on the due date". Because you are using the lender's money, interest-free, for longer.  Meanwhile your own money is (hopefully) giving you some extra return over that period.

---

I get this in theory, but in practice?  Let's assume geo has a 1500 dollar credit bill from Chase.  Most of us are paying our credit cards from our primary checking account I'll assume.  If geo pays 1500 on due date or 750 on say the 15th and the due date what is the opportunity cost of that extra 750 in a checking account?  How in real terms are people "profiting" by only paying once. 

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I would assume the interest even if low on $750 just for 2 weeks earns you something.

[mitchblue]

Plus time, I probably use 5 cards in a month. I'm honestly too lazy to pay twice a month.

[Anonymous]

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@Anonymous wrote:
Lol well that escalated quickly . OP I totally understand your point. I'm in rebuild status so even getting a $250 auto CLI is incredibly exciting to me. I'm also puzzled by those that have so many credit cards and thousands upon thousands of dollars in limits but amazing credit scores so obviously their UTIL is low so why do they need so much? LOL, well maybe because they can. Maybe they think they need it, and maybe they just get satisfaction from getting those CLI's because hey, it's like getting an A on a paper in a class you're already acing or getting another raise at work: it's HARD to obtain and maintain the level of credit worthiness in America it would take to not only get those high limits but also to continue to use credit responsibly enough to maintain that low utilization. In the end, this one forum gets soooo much more traffic than any other subject. I can go all afternoon and no one will post anything on the mortgage threads but this one is always always lit up.

I think the answer to your question is that they can, it makes them feel good in some way, and they are obviously mostly managing it correctly so they aren't seeing hits to their credit. Also, I'll be honest: I think it's a little elitist as well. If someday I can rebuild to be able to manage high limits in a responsible way, after what I've been through with my credit, hey, I'll join the "elite" as well .

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No kidding.  I wasn't trying to start World War 3 and I think some people are out to get me for trying to spark a convo lol.  It's all good.