Why do some cc lenders issue prime cards but with sub-prime CLs?

[galahad15]

Why do some cc lenders issue prime cards but with sub-prime or toy CLs (say the dreaded "$500" SL)?  For example, do they do this as a way of allowing someone to get his or her foot in the door with the lender and then build up the limit over time?  Or is it the case that with some lenders, if they issue you an extremely low SL, that you are stuck with that limit for good with no realistic chance of CLI?  Or is it for yet some other reason?  (I had more than one cc lender do this to me with a toy SL, but could not figure out the exact rhyme or reason as to why.  Whereas with other cc lenders, I have CLs as high as over $9k, etc.)

[Anonymous]

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@galahad15 wrote:

Why do some cc lenders issue prime cards but with sub-prime or toy CLs (say the dreaded "$500" SL)?  For example, do they do this as a way of allowing someone to get his or her foot in the door with the lender and then build up the limit over time?  Or is it the case that with some lenders, if they issue you an extremely low SL, that you are stuck with that limit for good with no realistic chance of CLI?  Or is it for yet some other reason?  (I had more than one cc lender do this to me with a toy SL, but could not figure out the exact rhyme or reason as to why.  Whereas with other cc lenders, I have CLs as high as over $9k, etc.)

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It's not the issuer that's prime or not, but rather it's the borrower that's prime or not.

If they give you a small limit, it can be that  they are just plain stingy (Target comes first to my mind), or maybe they think your total exposure is too high imcomparison with your credit profile and income.

[Anonymous]

and to add, maybe the requirements were barely met for the underwriting criteria on said cards.

also, some lenders will pretty much leave you stuck at your SL that's why i don't recommend people with a 630 and a new report get a freedom card right out of the gate. the apr and SL are pretty much what you'll die with with minimal exceptions.

your other cards do play a small roll in getting approved for higher limits but that doesn't guarantee it. if your exposure is too much then a low SL is quite possible and probable. there's no set answer to your question but a ton of things take part in that decision being made so bear as much as you can in mind when doing an app and for what card. chances are you nor anyone else will figure out the "reasons" for certain decisions

[Anonymous]

I don't care much about APR, but it only took 10 HPs or so for me to get from $300 to $2000 Freedoom card But I was only 19, didn't know any better, didn't even know that there is such a thing as "credit score", there was only 3 big banks in town, and Chase kept sending me mailers. At least I got "in" without much trouble

[ddemari]

I think with lenders like Citi, Bank of America, and even Barclays (although there are a lot more) these come to mind and like another posted stated; usually when you get approved for a tiny limit its because you barely made the cut off between denial and approval. 

But in other circumstances like for example say you get approved for PenFed Promise Visa at 11.9% apr and $1,500.00 credit line. You clearly are a credit worthy person, but either the bank doesn't know you yet, or you haven't had experience managing higher credit limits. They let you in, you prove them that you are going to pay and they usually increase your credit line or approve you for another card down the road with a larger limit. 

When I was starting out I wasn't real focused and kept utilization high, applied for anything and everything and would yield disappointing limits. But once I let my Credit Reports age 2+ years of history, low utilization and excellent payment history, the approvals went from $500 dollars, to $5,000.00 to $10,000.00 to up to $20,000.00. 

[Anonymous]

keep in mind just because you get a low APR doesn't mean you're a "credit worthy person" though. APR is based on score, SL is based on history and reports. working in lending i see many people with high lines and horrible APRs as well as low APRs and low lines. depends on the whole picture.

[ddemari]

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@Anonymous wrote:
keep in mind just because you get a low APR doesn't mean you're a "credit worthy person" though. APR is based on score, SL is based on history and reports. working in lending i see many people with high lines and horrible APRs as well as low APRs and low lines. depends on the whole picture.

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its the whole picture for sure. 

[creditguy]

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@Anonymous wrote:
and to add, maybe the requirements were barely met for the underwriting criteria on said cards.

also, some lenders will pretty much leave you stuck at your SL that's why i don't recommend people with a 630 and a new report get a freedom card right out of the gate. the apr and SL are pretty much what you'll die with with minimal exceptions.

your other cards do play a small roll in getting approved for higher limits but that doesn't guarantee it. if your exposure is too much then a low SL is quite possible and probable. there's no set answer to your question but a ton of things take part in that decision being made so bear as much as you can in mind when doing an app and for what card. chances are you nor anyone else will figure out the "reasons" for certain decisions

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This is a very good point!! I see people who apply with borderline scores and get approved for Amex or Freedom with a $500 limit, who then say I don't care I'm just glad to have a foot in the door. Well what good is a foot in the door if that's all they let in the door for a while.

I'm not criticizing anyone's decision to apply with marginal scores, I just want people to know what you pointed out, Your cheating yourself out of better SL's by jumping the gun and applying with a minimum score. Odds are, if you give your score six months to go higher, you more than likely will get a better SL, whereas is you start with a toy limit, it could take years to obtain that same limit. Once again, great point and thanks for mentioning it. 

[9CLINE]

+1000
Kudos to well made points ... hopefully more will listen to them...now this is learning something....

[Imperfectfuture]

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@creditguy wrote:

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@Anonymous wrote:
and to add, maybe the requirements were barely met for the underwriting criteria on said cards.

also, some lenders will pretty much leave you stuck at your SL that's why i don't recommend people with a 630 and a new report get a freedom card right out of the gate. the apr and SL are pretty much what you'll die with with minimal exceptions.

your other cards do play a small roll in getting approved for higher limits but that doesn't guarantee it. if your exposure is too much then a low SL is quite possible and probable. there's no set answer to your question but a ton of things take part in that decision being made so bear as much as you can in mind when doing an app and for what card. chances are you nor anyone else will figure out the "reasons" for certain decisions

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This is a very good point!! I see people who apply with borderline scores and get approved for Amex or Freedom with a $500 limit, who then say I don't care I'm just glad to have a foot in the door. Well what good is a foot in the door if that's all they let in the door for a while.

I'm not criticizing anyone's decision to apply with marginal scores, I just want people to know what you pointed out, Your cheating yourself out of better SL's by jumping the gun and applying with a minimum score. Odds are, if you give your score six months to go higher, you more than likely will get a better SL, whereas is you start with a toy limit, it could take years to obtain that same limit. Once again, great point and thanks for mentioning it. 

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Yes, yes, emphasis yes.

With the exception of cap one and cu card, waited for all others until reports cleaned.  Waiting for the elusive drop in apr for both Aviator and Quicksilver.