A Credit Card Question

Shel_B

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I have a card thru CitiBank that had a 6,500 credit line. Before leaving on my cross-country trip, I asked for an increase (just in case I had some problems). I was turned down and was told that I was at the maximum for that card. When I returned from the trip there were a few thousand in charges on the card and I'd not yet made any payments on it. Because of the charges, my credit score dropped substantially. Last week I received a notice from the card company increasing my credit limit by about 35%.

Why might they have done that after turning me down when my score was high (above 800) and then owing a large amount and not having made any payments and my credit score was lower? I'm just curious about the reasoning.
 

dishdude

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It'll bounce back in a month or two, don't get too wrapped up in utilization...just make sure you pay your bills on time.
 

Shel_B

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It'll bounce back in a month or two, don't get too wrapped up in utilization...just make sure you pay your bills on time.
You've totally missed the point of my question. I'm not concerned about my lower score, or it "bouncing back." I am just curious as to why the card company may have increased my credit limit at this time (lower score, owing lotsa $$$, and having turned down a request for an increase earlier). Of course I pay my bills in a timely manner ...
 

dishdude

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You've totally missed the point of my question. I'm not concerned about my lower score, or it "bouncing back." I am just curious as to why the card company may have increased my credit limit at this time (lower score, owing lotsa $$$, and having turned down a request for an increase earlier). Of course I pay my bills in a timely manner ...

You're asking a question no one here can answer.
 
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Sometimes you get an immediate (computer generated?)denial then a better considered decision comes in the mail later.
 
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Last week I received a notice from the card company increasing my credit limit by about 35%.
To encourage utilization. This is how it plays out: they increased your limit. If you get close to the limit, but you make more than the minimum payment, they will increase the limit again, and then they will also bump up the interest rate. If you only make minimum payment for a while, they will no longer increase the limit, but they will really bump up the interest rate. That great score of your doesn't mean much when it comes to these loan sharks because at the end of the day all they want to do is bleed you dry.

Though I find it interesting that these days when you pay off a loan, your credit score drops, and stays down for a while. It's almost like they want people to stay in debt and then get some more of it.
 
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CC companies have strange algorithms to tell them when to increase your credit limits. Sometimes they just increase it and some companies are very stingy about it. No point wasting too much speculating about it.
 
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some companies are very stingy about it
Capital One is one of those. They are more willing to open another credit line for you than increase your existing line just because they know they can make more money from fees.
 
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My guess - and that's all it is.

Credit scores work in bands. I think the top band is anything above 780 - or used to be. So while your score may have dropped, you likely didn't change bands so in there eyes its the same. There are some super special things for people that are at or near perfect - 840 - but most can never get there even if you pay on time because it also involves using a lot of credit and paying it off and other nonsense.

As for the credit raise - I agree that it was probably an automated decision. You were likely declined when you asked based on some algorithm that indicated you never use your credit card enough to justify an increase, and then boom - you hit that trigger and off you go.
 

Nick1994

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If you don't use much utilization, they won't give you a real high limit. But once you start exercising it more, they'll give you more credit.
 
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My guess - and that's all it is.

Credit scores work in bands. I think the top band is anything above 780 - or used to be. So while your score may have dropped, you likely didn't change bands so in there eyes its the same. There are some super special things for people that are at or near perfect - 840 - but most can never get there even if you pay on time because it also involves using a lot of credit and paying it off and other nonsense.

As for the credit raise - I agree that it was probably an automated decision. You were likely declined when you asked based on some algorithm that indicated you never use your credit card enough to justify an increase, and then boom - you hit that trigger and off you go.
Seems like once you get to 800, it takes a lot of installment loans (cars, etc.) to go any higher. Paying all of it off every month & having extra $ in the bank gets you nothing-the bureaus want you to play the game & not just reap the rewards…
 

CKN

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My guess - and that's all it is.

Credit scores work in bands. I think the top band is anything above 780 - or used to be. So while your score may have dropped, you likely didn't change bands so in there eyes its the same. There are some super special things for people that are at or near perfect - 840 - but most can never get there even if you pay on time because it also involves using a lot of credit and paying it off and other nonsense.

As for the credit raise - I agree that it was probably an automated decision. You were likely declined when you asked based on some algorithm that indicated you never use your credit card enough to justify an increase, and then boom - you hit that trigger and off you go.
Many credit sites say once you are above 750 there isn't any difference on loan rates at 800 or above. You have excellent credit at 750-you really cant get better rates at 800 on loans etc. I have read that on several sources.

If you or anybody else knows this isn't the case I would be happy to her about it.
 
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My guess - and that's all it is.

Credit scores work in bands. I think the top band is anything above 780 - or used to be. So while your score may have dropped, you likely didn't change bands so in there eyes its the same. There are some super special things for people that are at or near perfect - 840 - but most can never get there even if you pay on time because it also involves using a lot of credit and paying it off and other nonsense.

As for the credit raise - I agree that it was probably an automated decision. You were likely declined when you asked based on some algorithm that indicated you never use your credit card enough to justify an increase, and then boom - you hit that trigger and off you go.
Since my bankruptcy, I'm like a hawk checking my credit score on Credit Karma. I did some home remodeling a few months ago and put a few thousand more on my cc than I usually do and my score dropped from 820 to 780. They seemed very happy when I paid it off the next month and my score jumped back up to 820. Just my casual anecdotal observation but they seem to like it when I run up my utilization to about 8% of your credit limit and then pay it all off. They get scared if I go over 10% utilization. I was surprised that my score would be that volatile based on just one month.
 
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