CC Usage deterimine CLI's?

[dbatl14]

I have been reading a lot of the threads in the forum in regards to "How much of a CLI you could get" and I wonder or if anyone has some insight if the banks actually leverage your CC usage and behavior?

We know that CC's track your spending and give you tools to analyze but I seriously wondering if they use this in their calculations of approving CLI's.  Your spending habits can build a solid profile about your financial state so that the longer you have an account and they can track your spending gives them a good inclination of your credit health.

Since you give them income and they can track how you spend and how you pay. So it gave me the curiousity if that is actually the case since there are so many variants and some people get huge increases and some get decline even though they fair better on their scores.

[Anonymous]

Every issuer has their own rules so there is no general statement or guarantee as to what a particular lender will do. They're all different. 

That said, in considering a CLI a lender generally looks at two things: Ability and willingness to pay. Your FICO score broadly represents your willingness to pay, whether you are responsible. They may augment FICO, but let's look at the other factor: ability to pay. 

They may measure your ability to pay in a couple of ways. One, if they know your income they can look at  your total utilization and calculate your debt to income ratio, then they will have some standard around what percent of your income can be used to pay debts (e.g., 35%). In that calculation, if it is known to them, they may also use some estimator of your monthly mortgage or rent payment. 

Often a credit card issuer won't have that sort of data about you, so they may then look at your historic ability to pay, as seen in your payments to them, and what they can glean about you from your credit record. As such, a demonstrated ability to pay large balances off on a regular basis will tend to give them confidence in your ability to pay. If you regularly pay off your balance in full, they may conclude from that something about the minimum payment you could therefore afford. 

All the above is necessarily hand-wavy because each individual lender makes up their own rules and the exact formula or data used will vary from lender to lender. But overall, an underwriter will broadly be trying to determine ability and willngness to pay.

[Anonymous]

I honestly believe your usage dictates your cli. Capital one started me out with a 200 dollar limit partial secured card(50 dollar deposit required) and was told over and over they never raise the limit.

Low and behold,5 monthes later it was bumped to 600$ for free,with no deposit required.I used that card a lot,along with the quicksilver that recieven a 2k cli from 500$.

Every case is different,but what I did was use the cards a lot,and pay the majority off before any cli''s occured.

[takeshi74]

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@dbatl14 wrote:

I have been reading a lot of the threads in the forum in regards to "How much of a CLI you could get" and I wonder or if anyone has some insight if the banks actually leverage your CC usage and behavior?

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It may play a role -- possibly more significant with some lenders than others but usage isn't going to overrule one's credit.  Limits -- both initial and increases are primarily determined based on credit and income versus the creditor's underwriting critieria.  Usage does factor into one's credit profile.  The various factors and the scorecards used by scoring models are intended to account for usage and behavior.

We don't know the specific underwriting criteria of the various creditors out there.  We can look at anecdotal data but there are issues with relying on such data. People are going to reply "I did this and got a CLI" but a lot of people don't seem to have a good grasp of causality so, as always, you have to consider your sources.  Odds are that their credit did improve or they already had the headroom for a CLI.

Something you can consider based on anecdotal data is that people do get CLI's with and without heavy usage.  People also get denials with and without heavy usage.  Usage alone (like any other factor on its own) isn't going to determine whether one qualiffies for a CLI.  One's entire credit profile is assessed and it's the overall assessment that matters.

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@dbatl14 wrote:

So it gave me the curiousity if that is actually the case since there are so many variants and some people get huge increases and some get decline even though they fair better on their scores.

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It is never just about score either.  A score is a tool but it's not the only consideration in a creditor's decision.

[dbatl14]

Thanks for the answers.

One other thing that I am curious about when we are talking about the "ability and willingness to pay".

I have seen several users that do not have a significant high income but yet they hold several CC with some high CL anywhere from $15 - $35K some with a combined spending ability of close to $100K.

I would think that with an income of about 50K that the ability to pay close to 100K would be difficult in case it would be acrrued unless banks would never allow that high of a spend.