Rebuilding and credit limits

[CaneVariant]

Question for the credit pros like @JoeRockhead and @Thomas_Thumb When rebuilding post-BK7 can getting a very large credit line on a new card impact future applications from the presence of an outlier limit? I just got approved for the venture x with a $30k limit. Not a bad thing but it sure seems like the c1 algorithms really want me to sh1t the $ bed again. Over on reddit they always scream "higher limits begat higher limits" but on a rebuilding scorecard could the reverse be true when I move to more traditional lenders. Thank you everyone for your thoughts

[JoeRockhead]

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@CaneVariant wrote:
Question for the credit pros like @JoeRockhead and @Thomas_Thumb When rebuilding post-BK7 can getting a very large credit line on a new card impact future applications from the presence of an outlier limit? I just got approved for the venture x with a $30k limit. Not a bad thing but it sure seems like the c1 algorithms really want me to sh1t the $ bed again. Over on reddit they always scream "higher limits begat higher limits" but on a rebuilding scorecard could the reverse be true when I move to more traditional lenders. Thank you everyone for your thoughts

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I wouldn't say that getting larger SL approvals will have a reverse, or negative impact on you no matter what dirty scorecard you're on.  Different lenders are going to look at your profile in accordance with what their own underwriting algorithms, standards, and concerns might dictate.  The $30k limit is outstanding, and while larger limits can help influence future approvals with other lenders, I'd say given the fact of a BK being on your reports, the timing of those applications would play a bigger role. 

The further you are from the BK (including up to when it's no longer on your reports) the better.  No matter what Cap One has done as far as taking a chance on you, you'll have others like Amex for example, that won't approve you any sooner than 61 months post filing (if you haven't burned them) and the chances they give you anything close to a $30k starting limit is going to be very, very low.  You'll have others that might not touch you until the BK is gone.  

Although Cap One is likely the most forgiving lender out there without question, they're still showing incredible confidence in you with that approval.  I'd caution you to not let it go to your head, and go out trying to replicate it with others.  Instead, let it age and build positive history along with your other cards.  The large amount of available credit allows you to be more strategic, and patient with future applications which should garner better approvals down the road.  

[Minimalist]

Make sure you don't put yourself in a position where you have to refile in 6-8 years (depending on chapter).  Make absolutely sure your finances are in order, so you don't have to use credit/go into debt to get yourself out of a jam in the future.  Make sure all the funds are there to prevent future debt.  Then stick with the Cap 1 card for 6 mos to a year (PIF every month, without fail) and then see about another card that's as BK friendly (Discover, or a secured card like Bank of America).  

[SouthJamaica]

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@CaneVariant wrote:
Question for the credit pros like @JoeRockhead and @Thomas_Thumb When rebuilding post-BK7 can getting a very large credit line on a new card impact future applications from the presence of an outlier limit? I just got approved for the venture x with a $30k limit. Not a bad thing but it sure seems like the c1 algorithms really want me to sh1t the $ bed again. Over on reddit they always scream "higher limits begat higher limits" but on a rebuilding scorecard could the reverse be true when I move to more traditional lenders. Thank you everyone for your thoughts

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There's nothing negative about it. 

[Jeffster1]

The only negative I can think of with higher limits post-BK is when people haven't learned restraint and run the cards all the way up again.

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[CaneVariant]

Thank you everyone for the replies. When I saw the pre-qual offer my first thought was the algorithms definitely think I am ready to go back into debt. I definitely do not want to do that. Since the BK I have built up a month of operational expenses, another 3 months of emergency fund and will max out my HSA this year. I also have a "5% debit trifecta" that takes care of the majority of my spend. So the plan is to hit the sub (done), use it primarily for travel and head back into the garden.

[Thomas_Thumb]

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@CaneVariant wrote:
Question for the credit pros like @JoeRockhead and @Thomas_Thumb When rebuilding post-BK7 can getting a very large credit line on a new card impact future applications from the presence of an outlier limit? I just got approved for the venture x with a $30k limit. Not a bad thing but it sure seems like the c1 algorithms really want me to sh1t the $ bed again. Over on reddit they always scream "higher limits begat higher limits" but on a rebuilding scorecard could the reverse be true when I move to more traditional lenders. Thank you everyone for your thoughts

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@CaneVariant 

Congrats on the card! That's a great start.

The high limit card won't hurt your dirty scorecard profile credit score. However, you may be more vulnerable than a clean profile to credit limit reductions (CLDs) if elevated utilizations are reported. So, use the card prudently to protect its CL. I would advise against allowing it to report a balance above 20% (keep well below the 29% card utilization penalty threshold). 

* Allowing aggregate revolving utilization to report above 9% will hurt score independent of individual card utilization.

It is true that a higher credit limit card on file may help obtain higher starting limits (SLs) on future cards. However, if your total CL becomes too high relative to demonstrated responsible use or income, that can be a deterrent to approvals. Avoid app sprees as they could also trigger a CLD or even closure on your new card.

[CaneVariant]

@Thomas_Thumb Thank you for the reply. The advice you, @JoeRockhead and many others on this forum has really helped with my rebuild. I remember you advising high limits make utilization manipulation unnecessary. With the new limit my organic spend will be well below the % you advise. For some reason that feels like an accomplishment. Thank you again

[Yasselife]

Great question; and one that doesn’t get asked enough during the rebuild phase. Congrats on the $30K Venture X approval; that’s a huge win post-BK7. While it can feel like an outlier limit might “spook” other lenders; most traditional issuers focus more on your overall profile: income; utilization; payment history; and responsible growth.

That said; you’re right that scoring models and underwriting can behave differently when you’re on a rebuilding scorecard versus a prime one. Some lenders might get cautious seeing a large CL if it appears disproportionate to the rest of your profile; but over time; if managed well; it becomes a strong asset.

In the long run; having a $30K card that you use responsibly is more likely to help than hurt. Just keep other limits growing steadily too; and don’t let one big line be the only anchor on your profile. You’re definitely on the right track.

[CaneVariant]

@Yasselife thank you for the reply. Since I know I'm black-listed by the big 3 lenders for at least 10 years and likely profile non-grata for another 6 years for some others I got to thinking that I could potentially run into this issue. Fortunately between the C1 duo and my 5% cb debits I have amply reward coverage so I can head to the garden for awhile. I have also refocused my banking to NFCU with the plan to eventually add one of their cards to diversify exposure. Right now it's all C1 with Mission Lane and Ally in the sock-drawer.