Road To Higher Credit Card Limits?

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zrussell
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Road To Higher Credit Card Limits?

Postby zrussell » Sun Oct 13, 2013 5:44 am

Hello,

This will be a lengthy post, but I want to give everyone a full picture of what is going on with my credit, so I can try to get the highest credit limit possible. My end game is to be able to get a 750-800 score so I can great rates on a mortgage, i'm currently 20.

My Current Cards:
Paypal Smart Connect - 3k (3k used)
Amazon Store Card - 2k (1.8k used)
Walmart Store Card - 1.1k (900 used)
Capital One Spark Classic Card - 750 (750 used)
Capital One Platinum - 500 (150 used)
Discover (Just converted to It) - 500 (350 used)
Boscov's Store Card (cap1) - 500 (0 used)
Credit One Bank - 500 (110 used)

My Credit score is really weird according to Discover Credit Card Tracker (which gives me my 3 bureau reports, I have a score of 673 across all bureaus). According to Credit Karma I have a 590 score. I honestly don't know which one to believe.

I have no derogatory marks on my report (late payments, etc..) but I do have something like 30 inquiries, which is the only thing that I feel is permanently affecting my score (along with high usage).

I run a web design company which I started a few years ago. I used to use my credit cards more heavily to pay for things, but now over the past few months i'm trying to pay things off. By the end of October I plan to have a few of my cards payed of and all cards with a 75% usage (or less).

I would essentially know the best thing I can do for my credit at this point. Should I close some cards? I'd really like to get the Chase Sapphire Preferred card in the future (my friend has one with good credit and only a few years older than me, it has great benefits), and I know that they want to see similar credit limits. I don't know if any of my cards give limits that high.

I'd appreciate anyone's feedback.

Thanks
Zach


kennys2006
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Postby kennys2006 » Sun Oct 13, 2013 8:02 am

Absolutely no to closing cards at this time with your balances the way they are. When you have near a 0 balance on all then you can think about it. The reason your score is lower is because of your utilization. Of course the inquiries don't help however that's not what is dragging it down mostly. Stop using your cards and pay down your debt. That would be my only advice. And GARDEN.. meaning no new trade lines.. let the accounts age and let the inquiries fall off. ;)

Good luck!

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otter
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Postby otter » Sun Oct 13, 2013 9:09 am

Hello Zach,

There are those on the forum who have much higher limits than me so they might be able to give you more specific advice on how to increase your limits, but I am currently rebuilding my credit after making mistakes when I was younger and so I can tell you what to avoid... I currently live by three rules when it comes to credit cards: (1) Don't spend what I don't already have in the bank unless absolutely necessary. (2) make sure my balance is at its minimum when the statement cuts. (3) Make sure CC's are "profitable" for me. So "Rewards earned > interest + annual fees + other fees". So I avoid cards with no rewards and an annual fee, but always make sure I don't pay interest EVER.

You've got to look at what kind of picture you are painting for your creditors and potential creditors.They don't know you or your specific situation, but they tend to look for patterns which show either "good" usage or "bad" usage which alarms them. Based on the information you've given, I think this is how your file is viewed by a credit analyst: The 30 inquiries by itself is a little alarming, but what probably keeps your current creditors from granting higher increases and scares CC's you apply for credit with is the 90% utilization COMBINED with the 30 hard pulls. The message you are giving them is "I am desperate for additional credit so I can max out some more cards because I don't live within my means." That might not be what is actually happening, but that's probably how they see it.

Your first priority before applying for any new credit should be to pay off the three GE cards you have. Sure, GE is great with CLI's, but they suck when it comes to interest rates. With your three current GE balances, you would pay over $1000 in interest annually. Make that a priority because that's what's where the bulk of your utilization is. Zero out those balances and your credit report is much better.

After doing that, I would look at improving your CC portfolio. Looking at the cards you have, I would say there is only one I would want in my wallet(which I already have)- the Discover IT card. None of them are really cards that are going to grow (or they are store cards with little use, IMHO). There are other people out there who could give you better advice on what cards to get than me, but as a general rule you should try to get cards which serve a purpose. If you look at the cards I have in my sig... you will see they all have a purpose- even the WF card with no rewards is useful for paying my cell phone bill since it provides insurance.

As for whether you should close some of your cards, I wouldn't close any which don't have annual fees. If I were you, I would consider closing the Credit One card since I'm sure it has high fees and the CL isn't likely to move very much.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

zrussell
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Postby zrussell » Sun Oct 13, 2013 11:38 am

Hello Otter,

Thanks for your response. I do think its a good idea to close the credit one card.

When I do pay off the Amazon & Paypal cards, do you think I should just stop using them altogether, or should I keep using them and try to get the CLs increased every few months?

Also, as far as applying for new cards (with a higher limit) what one should I apply for? I'm looking for one with a higher limit that will be a "Gateway Card" between this and a Chase Sapphire Preferred card (a few years down the road).

Suggestions?
Thanks!

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otter
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Postby otter » Sun Oct 13, 2013 2:59 pm

zrussell wrote:When I do pay off the Amazon & Paypal cards, do you think I should just stop using them altogether, or should I keep using them and try to get the CLs increased every few months?


I would keep the three GE cards open and use them sporadically since I don't believe any of the three have annual fees. The important thing is show a small balance on them come statement time and to pay them off every month. GE is pretty good about CLI's so their cards tend to help overall utilization if you have self-control.

zrussell wrote:Also, as far as applying for new cards (with a higher limit) what one should I apply for? I'm looking for one with a higher limit that will be a "Gateway Card" between this and a Chase Sapphire Preferred card (a few years down the road).

The good news is that you have no negative payment information on your report. Once your utilization comes down below 20% or so and the majority of your 30 inquiries drop off, you should have an excellent score. You should be looking for rewards cards with no annual fee and by the time you get your utilization down you should have good odds to get one of them. I like some of the Barclaycards and they do tend to give good CL's and give regular increases. The caveat with Barclaycard is they don't like when customers open a lot of tradelines within the first six months of opening an account with them. The Bank of America Cash rewards card is pretty good, but I have the secured version and don't know exactly how hard the unsecured version is to get. Chase Freedom is a pretty good card and might be a good "gateway" card to some of the more premium Chase cards.

Do some research and see what cards work for you. Everybody's spending patterns are different... what gives me maximum rewards might not be good choices for you and vice versa. Read some of the excellent posts by Michael Dolen on this forum (or the blog) to get a good "feel" for what a good rewards card should offer. Don't just take the first reward card that comes your way and be more decerning about which cards you apply for.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

whit
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Postby whit » Sun Oct 13, 2013 5:36 pm

how is your web design company doing?

at twenty are you still currently in school or you're invested in your company full time or working FT/PT while running your company?

between what's being said, another factor companies look at when lending you, besides utilization, credit history, credit limits you have..they also look at your capability to pay back when extending you a line of credit--that's revolving circumstances greatly fall (which is what cc are essentially, but without any real collateral)

they look at how long you've been with present company if you are working as well as income generated, as well as how long you've lived in your current residence and whether you are renting/mortgaged and how much.

if you want to pull up your credit score and pull up your credit limit ultimately the best way is to try to keep the usage down low as possible..and to increase your income level. Because eventually in a decade or so you can get up to a few thousand or xx,xxx worth of CL on one card with good usage and strong credit history.

You can get there faster if you show good credit usage along with an income that can support lending xx,xxx CL on a credit card.

I would pocket store cards, focus on 'prime lenders' such as discover, chase, citi, american express, etc.

Right now I would start to pay off/down all of my cards.. and use discover, maybe the paypal one too since that has the highest limit, and then ask for a credit card limit increase.. once everything has been paid off I'd most likely just leave the store cards at 0--apply for a cashback card from citi or chase, and then close the store cards down.

Then work on building the credit limit by showing I can use the cards responsibly (paying off on time, keeping the usage low, or if I have to charge higher expenses making more then one payment in a statement cycle) and again asking for increase.

Be picky about who you'd want to have in your wallet and soon things will start to swing your way, where you'd get offers in the mail and asking for credit limit increases become easier.

Just my two cents though. That's how I did it when I was starting off in college (mum got me a cc at 16) so I did have help, and lending was a lot more flexible before the 07/08 meltdown

zrussell
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Postby zrussell » Sun Oct 13, 2013 5:59 pm

Thanks for the detailed response.

My web design business is doing surprisingly well. I'm dedicated to it full time with a few part-time employees (contractors) and I just hired my first full time employee.

With that being said, I've been with my company for 3 years now (which is what I have listed on CC apps), and my income has obviously risen with my company's growth. I have moved a bit in the past few years, so that will be held against me, but I plan to purchase a house in the next few years (hopefully 2) so that will help me in the long-term.

My real goal for a higher end card is the benefits especially on travel & dining. I frequently travel across the country for conferences and entertain clients locally for dining experiences, which is why I could greatly benefit from rewards on these predictable (yet tax deductible) purchases.

I think I will stick with only the discover in my wallet and my spark card for business for the time being. I am not particularly a big fan of C1, but they do give cash back (however mediocre) and are good for just starting to build credit.

The majority of balances on my Amazon & Paypal I got were from computer builds + laptop for presentations so they were both more of an investment than purchases (not a justification, but If I was going to get new hardware I wanted it to be top of the line and last me for 4-5 years).

Have a great day!

takeshi
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Postby takeshi » Mon Oct 14, 2013 8:02 am

You're currently at ~80% utilization with several maxed out lines. Get the maxed out lines reduced and get your utilization down. 30% is the commonly recommended max and 10% is generally regarded as ideal. Your utilization is what's holding your scores down and 'll see your scores improve as you hit certain utilization milestones.

zrussell wrote:My Credit score is really weird according to Discover Credit Card Tracker (which gives me my 3 bureau reports, I have a score of 673 across all bureaus). According to Credit Karma I have a 590 score. I honestly don't know which one to believe.

They're all FAKO scores and don't really mean much. FICO scores are only available directly from FICO. FAKO's are handy for monitoring general trends but if you want to know your FICO score then you need to get your FICO score. However, at this point I wouldn't worry about the score as you have quite a bit of work ahead of you before you need to worry about applying for anything.

zrussell wrote:I have no derogatory marks on my report (late payments, etc..) but I do have something like 30 inquiries, which is the only thing that I feel is permanently affecting my score (along with high usage).

Inquiries do not permanently affect your score. An inquiry's effect mostly falls off after a year and an inquiry will fall off after 2. Don't apply for anything until you get your utilization down. Even if you get approved you won't get good credit limits or terms.

zrussell wrote:I would essentially know the best thing I can do for my credit at this point. Should I close some cards?

Absolutely not. You're already at 80%. Closing accounts will make your utilization even worse. You can do the math to see for yourself. If you closed the Boscvo's card you utilization would increase to ~85%.

Drop your utilization and do not use lines as you pay them down.

zrussell
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Postby zrussell » Mon Oct 14, 2013 8:35 am

Makes perfect sense, thanks. I'll get my utilization down in the next few months.

Thanks again for your help.

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Postby DoingHomework » Mon Oct 14, 2013 8:40 am

zrussell wrote:Hello Otter,

Thanks for your response. I do think its a good idea to close the credit one card.

When I do pay off the Amazon & Paypal cards, do you think I should just stop using them altogether, or should I keep using them and try to get the CLs increased every few months?

Also, as far as applying for new cards (with a higher limit) what one should I apply for? I'm looking for one with a higher limit that will be a "Gateway Card" between this and a Chase Sapphire Preferred card (a few years down the road).

Suggestions?
Thanks!


Geez! STOP making inquiries, it is killing your credit. STOP charging things on the cards. Your utilization is killing your credit.

You should do nothing but make payments for at least 2 years and have your utilization under 10% by then. At that point you can reassess.



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