Auto-CLI's versus a new account, and score effects?

[Lucid08]

Hi again all!

Wanted to ask about auto CLI's and the effects that occur when they show up on someones CR.

I'm trying to understand what happens in terms of util percentage versus outstanding balances. I know that if someone is carrying a balance, the effects of a CLI will be a positive in terms of util for that specific card, and it will also be a positive in terms of overall util across all revolving accounts.

But what effects does a CLI have for someone who carries balances below the 9% threshold or no balance at all? If I understand how this works correctly, a score increase from a CLI would only occur if the CLI raises the current CL to a point where the person falls back below that 9% mark due to the CLI.

I was playing with the score simulator earlier, and if I added a new CC with a 10000 CL, my score would jump quite substantially(50 point range), but if I paid all of my bills on time for the next year my score would not be as high(30 point range) as it would be if I added the new 10000 CL. This has me confused as to the effects of adding a new account(versus a CLI), which would affect my average age and should -lower- my score, but the score simulator says it wouldnt. Since there is no way to simulate a card receiveing a CLI I thought I would ask about this here.

[haulingthescoreup]

There are score bumps for util thresholds under 9% for some people, but you're right, there is no effect for those with 0%.

I like them for insurance, so to speak, if I ever do have a balance, and also because it presumably makes me look better in the eyes of other lenders. Lenders tend to be kind of follow-the-leader: well, if these other guys think he/she is OK, then I guess it's so. Also, some lenders will try to match existing CL's when you get new credit.

Maybe the sim "wants" you to have an additional TL (credit account) to improve your overall profile. How many open accounts, and of what type, do you have now?

[Lucid08]

Hello Hauling,

In terms of revolving accounts; I have three. Two NFCU cards @ 2500 CL each, and an Orchard card @ 500 CL. I've made heavy use of the NFCU cards for the rewards points and for this billing cycle I'm at roughly 44% util according to my latest report. The odd thing is that that my score has actually gone up from 622(before getting any of the CC's) to 653 with all 3 reporting and a heavy util on the NFCU cards. According to the simulator, if I pay all of my bills on time for the next 12 months my score would be in the 670-703 range. But if I get a new CC with a 10000 CL, my score would be in the 690-733 range.

This has me stumped, because even if I was curently at 0% utilzation, the net effect on my score according to the simulator, would only be a 30-40 point jump as well. It appears as though FICO wants me to have a 4th revolving account or something.

[haulingthescoreup]

It might be nudging you toward that supposedly perfect profile of 4 or 5 cards. Just a guess, though.

Expanded "FICO High Achievers" list

[tonsers]

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@haulingthescoreup wrote:
"It might be nudging you toward that supposedly perfect profile of 4 or 5 cards. Just a guess, though."

I had three revolving accounts for several years - no lates, no baddies - and was sorta stuck at the 730 range. I applied for two new cards and my score went up by 20 points overnight. Now, six months later, I'm up to about 770. I think that there is something to that 4-5 card profile...

Message Edited by tonsers on 09-14-2008 06:39 PM

[haulingthescoreup]

Same thing happened with my 20-year-old. Just like OP, the sims were telling her that an additional card would help her score, and it did. $1K CL though, lol.

[Lucid08]

Ok, so back to my original question....

Since the simulator is hinting that my score would be "better" improved with adding an additional TL, and since there is no way to use the simulator to see the effects of adding CLI's to existing accounts, which, in fact, would be the best way to go?

Would waiting for an auto CLI to hit my NFCU cards be more or less beneficial to my score as waiting for recent inquiries to age off and apping for a newer, higher limit TL?

In my situation, my inquiries will be aged 1 year and come off my score in about 6 more months, which is about the same time frame that my first auto-CLI is supposed to be available from NFCU.

[haulingthescoreup]

Actually, you can simulate the effect of increased CL's by going to the "pay down balances" section. Figure out what your util would be if your CL's were increased, and then take that util figure and crank it back into your current CL's, and see what balance would create that util figure. Enter the payment amount that would get you down to that balance in the one-month option, and see what it projects. That's sort of bass-ackwards, but that's how you estimate changes in util, whether it's from balance paydown or CLI's.

BUT if you find that you're not getting much of a score change once your for-real util is under 10%, you can think about adding a card. I would wait until all your reports have updated with all your current balances to find out your current util, and run the sims again. If you're still being nudged toward a fourth card, you can then decide whether to make the jump.

Since you have three decent cards now, I wouldn't apply again until I had the scores and reports that would get me a good card with a good CL right out of the gate. Otherwise, you might get stuck with one of the cards with invisible CL ceilings that will only go so far. Always get yourself in prime position before you go apping.

If you don't have any big-time negatives, and if all your new cards are over 6 months old, it might be worth it. If your EX score goes over 680 or so, I'd look at BofA, as they are good about growing with you. Do some reading here to find out about individual card company quirks, which requently read like a Playmate's turn-on's/ turn-off's, lol.

But I wouldn't do a thing until I had fresh FICO score reports showing the new util, and I had run the sims again. Sometimes when there's a big change on your reports, you get completely different feedback from them.

Also, look at the negative factors listed on all three reports (the second screen.) If "short history" or "seeking credit" is listed as first or second in the negative reasons, I would take that as a sign to hold off until my current cards started hitting 12 months in age.

[Lucid08]

OK, this is odd. I just pulled a new report and my util across all 3 cards is actually higher on this report than the previous, but now the simulator is telling me that if I pay all of my CC debt off over the next 12 months, my score would be in a higher range than if I app'd for, and received a new card with a 10000 CL.

Completely opposite from my results in my OP.

Does anyone know if the score simulator figures in a baddie dropping off during the time frame that a simulation is run for? I have a baddie(my only one) that is due to drop off around November....so 2 months from now. So if I run the "make X% payments for the next 12 months" simulation, will the reflected score be indicative of the baddie falling off during that 12 month simulation period?