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Larger Credit Lines / Higher Credit Limits

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#1 googaloo


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Posted 08 August 2008 - 03:23 PM


I'm sure I'm not the only one who's chuckled at the number of recent posts asking how to get lines that are "large enough", without any details about what the poster's goals are. Before deciding what your targets will be for your line sizes, please consider this list of reasons and refine your questions accordingly (Also, please help me refine this list of reasons, as I'm sure I'm missing some.)

A. More purchasing flexibilty. This one is the most obvious. If I have a $25,000 rewards line, I probably don't have to worry about going over the limit regardless of how much spending I do in a month. Indeed, if this is the main reason for a larger line, $5,000 would be more than adequate for probably 90% of FWF members.

B. A bigger emergency "reserve fund." A great feature about credit cards is that they allow you to get quick cash when you really need it, without getting approved for a loan application. (Of course, a person who does this in a naive way could set themselves up for very high interest, but that's another discussion.) If I have $20,000 in unused, unsecured, reasonable-rate credit available, I can rest a bit easier knowing that if a medical or other tragedy should strike, I have that to fall back on.

C. Lower "credit utilization" at any given usage level. As discussed in detail on the score thread, lower utilization helps your scores and your overall credit profile. So even if you'll never "need" a $10,000 limit on your card, it's MUCH better to have this limit than, say, a $3,000 limit if you cycle often closes at $2,500 a month.

D. Better return from investing promotional-rate money. The
"Investing w/ credit lines" thread goes into plenty of detail about how one can make money useing their promotional rates. For our purposes here, it's enough to observe that bigger lines = bigger profit for essentially the same hassle factor. Indeed, it's even better than that once tranfer fees are introduced. It probably doesn't make sense to do a 12 month at 0% offer on a $2,000 line if there's a $75 fee. But if it's a $20,000 line, there's a MUCH GREATER than 10x return available.

E. If you raise one, others may follow. I've seen dozens of instances in which creditor A was willing to increase a line to $x only after creditor B already did so. This is especially true with limits of $50,000 or below. There is some logic to this: if other creditors have found you worthy of $10K, then that is one reason for thinking it wouldn't be imprudent to for us to grant you $10K as well. And beyond logic, banks and creditors love to play follow the leader. (And after all, while they can't see or easily confirm your income, they can see your (reported) credit limits based on the inquiry they just did.)

After mulling these over, one should have a better sense of what their goals for line sizes are. Having explored that, let's move on to:


A. DO YOUR HOMEWORK!!! Yeah, yeah, you say...but this isn't just a nag. Believe me, you will be FAR better equipped to obtain large lines if you have spend the time needed to familiarize yourself with various line-increase tactics discussed here and elsewhere. Card issuer policies differ, sometimes dramatically, and careful searching and reading here will familiarize you with which strategies should be most promising and along with possible pitfalls to avoid (like American Express's dreaded "Financial Review"). Moreover, posters at FWF and elsewhere will be far more inclined to give you useful help if it's clear you don't need to be "spoon fed." One useful step, especially if you've got five-figure lines already, is to see what has actually worked for other FWF members at the LARGE credit lines thread.

B. Cover the basics: keep the report flawless and scores high. Following the rules in the scores thread won't guarantee you high limits, but they'll make it MUCH, MUCH easier to do so.

C. Report your income as generously as the apps allow. While it's against the law to lie about your income for purposes of obtaining credit, there's no reason you can't report income in the manner most favorable to your situation. The classic case is when the application form asks for "household income" only. Well, if you live with roommates or parents, it isn't technically inaccurate to include an estimate of all that income. Of course, if they asked you to document YOUR income, that would be a different matter. But 99 times out of 100, they won't. And if they do, you can answer truthfully.

D. Consider requesting balance transfers at application time. This is hard to track, but many issuers have seemed to give larger initial credit increases if you're willing to transfer a balance at the time of application. These practices vary considerably, even with the same issuer, so YMMV...but if you have a good "destination" elligible for a balance trasfer (sometimes even a checking account will do), this is a strategy to consider as well. (Thanks SecondCor521 for the reminder).

E. Strategically "spend" credit inquiries on increase requests. FWF contains untold paragraphs waxing enthusiastic on getting NEW lines of credit. But few seem to think carefully about how to bolster current credit lines. Why not get your credit in tip-top shape, along the lines of the credit line thread; and then submit several line increase requests at once, "AOR style"? The great thing is that unless your utilization has grown so high that your lines are cut, you will only be BETTER off 6 months from this "application spree". Why? (a) the significance of the inquiries will fade away, (cool.gif all your lines will be six months older, and at least some of them will almost surely be larger than they otherwise would have been....further boosting your credit score/profile.

F. Watch for "hard inquiry free" line increase opportunities. Some issuers will give you a chance online or over the phone to "see if you're elligible" for a line increase. Often, when you indicate your assent, you'll be prompted that a credit inquiry/check/evaluation will be needed. This ALWAYS means a "hard inquiry". But sometimes, it will instantly approve you without such a prompt. Usually in such cases, you'll get the approval without the "hard inquiry". There's a data thread maintained by dlr3 about what as worked here (thanks markkundinger).

G. Selectively reallocate and consolidate your lines. I explain on the credit score thread that generally, reallocation (moving part of the credit line from card A to card cool.gif is better than consolidation (closing card B and moving it all to card A). But either way, when done carefully, this can be the most rapid and reliable way to crack new "limit tiers." For example, many FWF members haven't cracked $25K on any one line, but have well over $25K with a single issuer...especially after all the mergers (MBNA & BofA; First USA & BankOne & Chase, et cetera). If you're in that situation, then after DOING YOUR HOMEWORK per above, why not see if you can reallocate and consolidate your way to $48K on one and $2K on the other? That might be just the thing to start cracking $25K on your other lines too. For info on which card issuer has been/is allowing which consolidation, please visit SIS's reallocation data-points thread.

H. A special note about AU status and line sizes. In the credit score thread I discussed the strategic use of "authorized user" status. In the context of getting larger lines, it can be even more helpful. For example, suppose your largest line is $5K, but your parents have a 10-year old line with their credit union for $25K. Well, odds are that if you're made an AU on that line, creditors will be much more willing to move your other lines closer up to that $25K...especially if you can provide decent sized income numbers to match. (I've actually done this for a couple of close friends, and it's worked like a charm.) Are your parents/friends/siblings wary of trusting you with that much credit? That's not mean of them, they're just being smart! What we did was, I made them AU, but they never even saw the card or the number, as it was sent to my address. They had no plastic to charge up, and literally didn't even know who to call to find out their number. Now of course I'm not suggesting that this will be much of a deterrent if someone's determined to charge up their new AU card. But if you proposed to Mom or Dad, "hey, if you make me an AU, it will help me, and I don't even want you to give me the card or number...", it might provide the assurance they need to get you that coveted status.

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