cancel
Showing results for 
Search instead for 
Did you mean: 

Credit Limit Increase. Will score go up?

tag
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

CGID makes a good point above.  If you visit the CC forum or CC applications forums, the vast majority of those looking for CLIs to lower utilization are reporting current utilization amounts in excess of the "ideal" single-digit range.  In fact, many of them are reporting utilization in the 40%-60% range, which if course makes obtaining CLIs all the more difficult.

 

Those that are posting about maximizing CLI potential are reporting utilization in the ideal range.  Almost none of those people ever reference their utilization though [with respect to how it would change from a CLI] because they are Transactors and exhibit PIF behavior from cycle to cycle.

Message 11 of 16
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

 


It's not certain (i.e. necessarily the case) that such a person is carrying debt.  But it strongly suggests it.  A person for whom a CLI is his chief or only way of lowering his CC utilization strongly suggests that he cannot pay his bill in full.  If he could then he wouldn't say that the CLI is going to be a huge help.  He'd know that he could control his utilization any time he wanted by paying down his debt.

 

Like you, I use my cards naturally and just pay the statement balance each month.  And of course, our OP may also always pay his cards in full each month.  If so, then he'll know what I said doesn't apply to him.  Generally, however, when I hear people talk about a CLI helping their score by substantially lowering their utilization, it means they are not paying in full.


 

These are really good points for all classifcations of purchasers except for very high spend transactors. I managed utilization for a long time by putting 90% of monthly spend on a charge card, avoiding the situation entirely. I'd still get dinged occasionally as an AU on my wife's CSR. This actually happened when we refinanced a home; I had to get her to pay mid-cycle and get a new credit pull to settle things down with the lender. Because her scores are quite high without the util issues, she can't be bothered to track util. We finally managed to make our lives a little easier through a CLI and encouragement on my part to do most of her spending on my Platinum or high CL Ritz cards. I could have also taken over her banking login, but I think that a little space to make purchases in private is healthy.

 

If I were to use true credit cards organically and only spend on my highest revolving limit card, I would occasionally be above 30% utilization on a single card but still under 10% aggregate. 2 months ago, I would have been at 80% on a single card and 48% overall. I'm hoping to eventually get limits that push me altogether out of penalty ranges with several vendors. Of course, this situation is managable with a charge card; it can be used almost exclusively leading up to applications for new credit. 

 

While I don't think I would neccesarily call it 'a huge help,' to get a CLI in the above mentioned circumstance, a big increase would have been convenient enough that I may not have started applying for other cards. Putting everything through AMEX is fine, but a little diversification makes me feel a lot more comfortable. I do find it interesting that the current  popular scoring model isn't capable of picking out high income/high spend transactors from high balance revolvers with similar history. The situations are obviously different, and presumably easy to detect, even without 'trended data.'

 

Generally though, I agree that more credit as a tool to manage revolving utilization is a bad idea. I can see certain arguments for 0% or very low interest financing, but these deals must be approached with great care and an immutable plan to pay them off. Financing with the intention of paying it off with a future bonus or raise is...unwise. I'm always really happy to see that the advice 'pay down your debt if at all possible' is almost always given regarding utilization issues. I sincerely hope more people start to take it to heart.

Message 12 of 16
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

climbfire, good post above.  One question for you though.  Have you ever considered multiple payments?  By multiple, I'm only suggesting 1 more per cycle.  You said at times you could be at > 30% on one card and around 10% aggregate.  If you made 1 extra payment per month, say mid-cycle, no doubt this would bring you to ~15% on your single card and solidly into single-digit utilization aggregate, thus keeping you in the maximum scoring range with respect to utilization.

Message 13 of 16
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

I could, but generally can't be bothered if I'm not chasing new credit. My scores are generally high, and I have enough financial minutia to deal with in my day job. I prefer to just set personal cards on autopay and leave them be. At the end of the day, it is easier for me to toss a charge card back in my wallet and pay with it than to make an additional payment. Another round of CLIs and apps will put me in a position where I won't need to worry about it until my spending habits change again.

 

More often, bonus spending becomes a real issue. New SLs are currently low enough that hitting the full spend tends to be on the border for the single card penalty. Citi's conservative SL combined with a relatively high 4k spend would nomally be done in a billing cycle and close at 50%. This time, I'm splitting it over a statement cut because of how things happened to line up with other minimums. I'll probably handle things like this in the future since I carry a personal MC, Visa, and AMEX almost all the time.

Message 14 of 16
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

If you're not seeking out new credit and don't care about maximizing your scores currently, then true there is no need to make 1 manual payment per cycle.

Message 15 of 16
Anonymous
Not applicable

Re: Credit Limit Increase. Will score go up?

Hi Climb.  Thanks for your thoughtful replies.  Great struff.

 

In general my thoughts were aligned with those of BBS.  It sounds like making an occasional payment is something you are willing to do if you are chasing extra credit -- which makes sense.  But if you are not chasing extra credit, then you likely don't need to care about your scores, especially about comparatively minor issues like one card crossing an individual util of 50%.

 

As it sounds like you are aware, the best thing for someone in your situation is to apply at least once a quarter for a new card that has a huge signup bonus, since you'd be spending a giant amount of money even if you had only debit cards, and therefore the minimum spend requirement is no problem for you.  Making one extra payment on a new card (assuming that is even needed) is only a tiny bit of work compared to to all the other work associated with a new card.

 

As I think you mention, adding more cards will increase your total credit limit so the "corner case" you find yourself in (huge amount of spending compared to current credit limit) will get resolved in fairly short order.  None of which is to say that seeking out CLIs on the cards you plans to keep long term is a bad thing.  It's just that, as BBS said a while back, our experience in most cases is that when a person on the forum is interested in CLIs as the method of of lowering his U, it's because he's carrying a fair amount of debt, rather than paying in full each month.

Message 16 of 16
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.