Why such high CL's? and more questions...

[Anonymous]

Hello,

New here and have spent the past year slowly rebuilding my credit. After a lot of googling for information, I always wind up back here as you all are such a wealth of information. 

In my 20's I abused credit, was very irresponsible, filed BK and divorced. Now in my 50's, for the first time since my divorce, I now have credit cards, but low balances, which help me manage low expenditures, but these low balances also give me small LTV ratio's, which are keeping my scores down (I'm assuming, I haven't pulled my fico's out lately, just using credit karma which i know is not totally accurate).

Question 1: In reading the forums here, it seems the goal is to have extremely high CL's...i'm wondering why, if its so important to keep low balances, why do we want five digit cl's? other than the fact that i'm finding obtaining credit my new addiction, we are working towards decreasing debt so why increase credit.?..

Question 2: In the next few months I plan to close my Credit One account. I've read in the past closing accounts hurts your score, is this true? To what extent and for how long?

Question 3: When I reach a 700 score I plan to apply for another card, an upgrade. My siggy should show what I have.  I've banked with Chase forever, and would love a Chase Freedom, or a CapVenture, travel would be nice, rewards are great but I just upgraded my CapOneP to QS yesterday...

unless anyone has suggestions on what would be beneficial to my wallet. I have 2 derogs which will be falling off in a couple months, one loan that just started, no lates, just all new credit within the year.

Thanks for all your help, I really love this forum

[Anonymous]

Simple answer to #1 is utilization. Every increase to credit limit lowers your existing utilization. Say you carry a balance of $100 on a $1000 limit card which puts you at 10% utilization. A credit line increase to 5k would drastically decrease your percentage of available credit used without having to pay down balances further

[fltireguy]

Why the high CL's ? That's a good question
I think it's a personal thing, well, at least in my case it is. I've had crappy credit pretty much all of my life. Before March 2016, at 50 years old, my highest CL ever was $1800 on a partially secured CapOne card. I set a goal, after reading posts on here for months- the goal was to have a high enough CL on a card to buy a new car with. Not that I ever would, or that a dealer would let me. But that was my goal. It took me a 15 months, and lots of hard work, but I went from a 535 TU in 11/2015 to my 757 that I have today. And, I went from $1800 in CL (excluding my car loan), to just north of $200k, with my highest CL being $23000 with NFCU, followed by $15k at PenFed. I finally got in with Chase, BofA, and other prime banks, as well as Amex. I did file BK years ago, but never burned any lenders thankfully

[Anonymous]

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@Anonymous wrote:
Simple answer to #1 is utilization. Every increase to credit limit lowers your existing utilization. Say you carry a balance of $100 on a $1000 limit card which puts you at 10% utilization. A credit line increase to 5k would drastically decrease your percentage of available credit used without having to pay down balances further

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Ok, that's what I figured, thank you so much SlightlyRemoved 

[fltireguy]

I should also add that, from 2002-2015, I had NO credit cards at all. One day, while on vacation, I went to pick up my rental car with my GF. Well, that particular location didn't take debit cards (and I had well over $15k in the bank). My gf knew that i didn't have any cards, and that I was a cash person. It was SO embarrassing when I had o have her put it on her Visa.... that was the beginning of the turning point

[Anonymous]

But I'll also freely admit for me at least, a high limit is very much an addiction & sense of pride. It makes me feel good about myself to know someone has deemed me worthy & trusted enough to be given a 5 digit limit.

As for applying for a new card, I would suggest looking at your monthly spending and use that to compare cashback/travel cards in order to determine where you can get the most benefit from your heaviest regular spending. As far as travel cards go I am enjoying the chase sapphire preferred that I just picked up as part of last month's 4 card spree (Amex BCE, CSP, Citi Costco, discoverIT. scores in 660-680,3 recently paid medical baddies).

Welcome to the forum, you'll be amazed at how much you can improve based on what you learn here

[Anonymous]

wow, fltireguy, I am highly impressed. obtaining credit after so long, I actually feel like a person again, it's such a strange sensation. each time i've received approval, even with OpenSky secured card, I felt that I finally came back to humanity. So now my new goal is to get my score higher, obtain higher CL's, and obtain a big-girl card.

[Anonymous]

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@fltireguy wrote:
I should also add that, from 2002-2015, I had NO credit cards at all. One day, while on vacation, I went to pick up my rental car with my GF. Well, that particular location didn't take debit cards (and I had well over $15k in the bank). My gf knew that i didn't have any cards, and that I was a cash person. It was SO embarrassing when I had o have her put it on her Visa.... that was the beginning of the turning point

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Been there done that for sure! Been married since 2012 & together since 2008 but until I finally got myself dedicated to repairing my credit & netting 4 prime cards this year, we've always only put her name on any accounts or loans for fear of my credit tanking our chances of approval or rates. After repairing for years & becoming a father it's become a real source of pride & sense of accomplishment to know we can open joint accounts/loans and I don't have to have a panic attack about ruining it. When I got approved for discover last month with a $10k starting limit I nearly cried with the joy of hitting that mythical 5 digit credit limit exists for responsible adults. 

[Anonymous]

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@Anonymous wrote:
But I'll also freely admit for me at least, a high limit is very much an addiction & sense of pride. It makes me feel good about myself to know someone has deemed me worthy & trusted enough to be given a 5 digit limit.

As for applying for a new card, I would suggest looking at your monthly spending and use that to compare cashback/travel cards in order to determine where you can get the most benefit from your heaviest regular spending. As far as travel cards go I am enjoying the chase sapphire preferred that I just picked up as part of last month's 4 card spree (Amex BCE, CSP, Citi Costco, discoverIT. scores in 660-680,3 recently paid medical baddies).

Welcome to the forum, you'll be amazed at how much you can improve based on what you learn here

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I can agree, SlightlyRemoved, it has been a high working on my credit, I receive a sense of pride from going from zero and being a "cash" person, I feel much better about myself having credit.

Thank you for your suggestions and welcoming me. I have learned so much already just in the past year, not even joining since the other day. I always wanted to join but I thought you had to pay a monthly fee. Glad I figured it out and got in! Take good care.

[ecxpa]

Credit is without doubt a tremendous asset.  Some of us take the long road to find that out especially if you are a "cash" person.  Once you find out the benefits of good credit you tend to protect it at all costs.  High CL are often misleading....... a CL of 10k is only worth about 3k before it starts affecting your credit, you don't want to ever carry balances above 30% of your credit line.   Sometimes, in doing various projects I do carry balances for 2-3 mos.  Because of my various cards there are usually a BT offer around on some of them.  So I often charge materials on one card and if I need to do a BT to another card sometimes without a BT fee.    Because of high CL,  utilization is extremely low.