When to pay off Card Balance? For credit limit increase...

[BKBurger]

Hi All -

Had a BK in 2008. Still working on building credit. Have an Orchard Bank and Capital One card.

Was wondering:

I max the card out every month and pay it off. I realize its better to have something like a 25% balance for FICO score purposes, however my goal is to get them to automatically up my limit.

I have noticed (coincidentally) that when I use the card to max, and pay off in the past, i get numerous credit limit increases.

So here's my question:

Is it better to have the balance (maxed out) showing at the statement close date when the card cycles, then pay it off the first few days of the next cycle?

Or is it better to run it up, and pay it off before the closing date, so it is at $0.00 on the statement date?

Again, when I say "better" i mean for triggering the card company machine to up my limit. Not "Better" in the sense of my credit score looking good.

Two very different things.

Thanks!

[HHM]

The answer really isn't that simple...

Some preliminary questions 1st

What are the current limits on each card?
When was the last time the limit was raised?
And, what is your credit score?

Keep in mind, at a certain point, there is a choke point for the cards. You belong to an account pool for the type of card you have. That account pool has certain credit and rating requirements and the card will have a max limit. At some point, to get higher limits, you (your credit) needs to advance you to the next tier. Your spending and use of the card works "within" the account pool, but once you reach the max for your pool, you need to advance to the next tier, and being advance is more based on credit profile than usage.

[BKBurger]

being advanced (to the next tier) is more based on credit profile than usage.

Fair enough. I guess I am basing this on years of previous experiences (I am 38) and having had many cards with up to a $50k credit limit prior to the BK. I noticed very clearly that if I did nothing with the card (or very little), absolutely nothing would change with the card. But the minute I would start using it like crazy (for whatever reason, coincidentally), suddenly my limits started getting increased.

There was absolutely no change in my credit profile.

Its clear to me that they identify people who either spend money a lot, and want to encourage them to spend more, or people who hold balances a long time, and want to increase their limit so that the finance charges are higher.

So I am going to stick with my opinion that usage plays a monumental role. Doing some googling also reveals that cards you use a lot get bumps much more often. I didn't reach $50k credit limit because I kept asking for increases, and my FICO didn't change that drastically the whole time either. If anything, they look at usage, and then query your credit profile. BUt the usage definitely triggers something.

Which brings me back to my question: To optimize chance of an auto-limit increase, do they just like to see high balances at statement close date? Or do they just want high balances at some point during the month?

If the former, then I will pay off the balance a few days after statement close.
If the latter, then I will pay off the balance at any time during the month, because all that matters is that I hit the limit.

To answer your questions:

Card 1: 750 (Orchard)
Card 2: 900 (Capital)
Card 3: 3000 (BMW card)

Card 1: Never as far as I know
Card 2: Never as far as I know
Card 3: Last month because i requested a jump from 1500 to 3000. Granted.

Credit score about 670-690 depending on the Agency.

[HHM]

That's fine, if you don't want to hear it, you don't want to hear it. I suppose your "singular" experience is what we should base how the creditors computers determine when to increase the limit.

I know what is hurting you, it is your credit utilization. If I rely on my "singular" experience, I never maxed a card and doubtful I ever had more than 30% utilization, and I got my limits increased routinely.

It is simply less common now. There are more controls on the change of term, and banks are being more cautious.

In any event, there is NO answer to your question because actions related to credit decisions never come down to a "single" variable. Its a combination of time, usage, and credit worthiness. Also, paying off the balance each month is probably not the right thing to do with your stated goal. Credit card lenders don't make money on people who pay their balance in full. Now, objectively, you SHOULD pay your balance in full. But from the banks perspective, it is not a good practice. You might get more traction on the balance increase if you charge $270 on the CAP One, and then pay it off at $90 per month toward that balance, then recharge $270, pay it off over 3 months, etc etc.

[LadyInTheRed]

Fair enough. I guess I am basing this on years of previous experiences (I am 38) and having had many cards with up to a $50k credit limit prior to the BK.

You are basing you opinion on your experience before your 2008 BK filing. Banks are not lending as easily as they were then and you didn't have a BK on your record. By maxing out your cards, you look like you need credit. Banks like to extend credit to people who don't appear to need it. To a bank, you look like somebody who filed BK 4 years ago, needs credit to make ends meet and are on a road that very well could put you in BK in another 4 years as soon as you are eligible to file a Chap 7 again.

Like HHM, when banks were giving out credit so easily, I didn't have to come anywhere near maxing out my usage to get automatic credit line increases. My theory, backed by what I have read on the topic, is that they liked extending credit to somebody with a mid 700 FICO score who carried balances and made timely minimum payments each month and never maxed out their cards. People like that are their bread and butter.

[Logan]

In my experience I would say your credit score is your limiting factor and you would gain some points if you would charge under 10% every month. Once your score is up you should be able to get some credit increases. Have you called Capital One or Orchard and asked them to raise your limit?

Logan

[BKBurger]

That's fine, if you don't want to hear it, you don't want to hear it. I suppose your "singular" experience is what we should base how the creditors computers determine when to increase the limit.

Snarkyness. My favorite. .... :-/

You want me to just ignore "firsthand experience" (there's a cup half full version of the negative "singular experience") ... and just assume its wrong? Sorry, I never learned anything in life by ignoring firsthand experience. Even someone who thinks they know everything about a certain topic can sometimes find out that there's something new to learn. So keep an open mind.

Additionally, as I stated in my original post, if you do some googling you will see numerous people across the web discussing techniques for getting auto-limit increases. So no. This isn't just my irrelevant "singular experience" which can be scoffed at with *eyerolls*. Many people know about this. PS: who is "we" ? You're just one person.

Let's just see what happens.

As of thus far, I've done nothing with the cards since they gave them to me. And nothing has changed. That is *exactly* how it was before my BK. So now we have a matching cause / effect with that. Starting this month I have begun maxing them out and will just take a shot in the dark as to when to pay them off. I will report back here if they start upping my limit. However I have this sneaking suspicion, purely based on the way you type, that you will dismiss it as coincidence if they do, or somehow make it look like you were still correct anyways. We'll see ....

I know what is hurting you, it is your credit utilization.

Thus far nothing is hurting me. Because I haven't tried anything. Prior to the BK the situation was the same. Barely use the cards - and nothing changes. Same then. Same now. I just got the cards a year or so ago. So I can't make the statement that im losing out on credit increases. Now .... if I start maxing out the cards, and they still dont start upping me like they used to, then we can discuss what may be hurting my chances. But I have not tested them yet. Only started this experiment 15 days ago.

You might get more traction on the balance increase if you charge $270 on the CAP One, and then pay it off at $90 per month toward that balance, then recharge $270, pay it off over 3 months, etc etc.

Possibly. I came here to try and figure out what it was that I did last time, and to give it another try now. That's all. I can't remember what I did last time. Was hoping someone here could give some tips and tricks. Apparently there are NOOOOOOOOOOOOONNNE its imposssssssssssssible ... lol. Yes i realize this was pre BK. But why not try it again? Neither you nor I know whether it will work. I just wanted help remembering what I did.

But it worked consistently, and was 100% based on CHANGE IN SPENDING HABITS. You can tell me im wrong if you want. You'd be wrong. I even remember having a discussion with a phone rep and hearing her tell me that it was changes in spending habits which triggered the algorhythms. What I can't re member is what exactly I did. Was it ...

1) Use the card vigorously for a few months and then completely stop? I seem to remember this having an effect.

2) Carry a high balance and only make minimum payments for a long time? I dont think this is what did it.

The more I think about it # 1 sounds correct. I remember using the cards a lot and then coincidentally just not using them anymore. Within a month or two, to "encourage spending" (as the phone rep put it), they'd alert me to a credit increase. In fact I am almost sure now that was what I did.

BKB

[Logan]

BKBurger, I have around 5 credit cards and none of them have voluntarily raised my credit limit in the past 4 years since I've had them. Also, my wife used to get balance increases all the time (she has no BK and a FICO of 800) and she hasn't had an increase in years.
I doubt any credit card company is in a hurry to give any of us more credit knowing our history. As I said above, if you want an increase just give them a call and ask for one. They' may be able to give you a small increase without running your credit or a larger one with a credit check.

Logan

[frogger]

Snarkyness. My favorite. .... :-/

You want me to just ignore "firsthand experience" (there's a cup half full version of the negative "singular experience") ... and just assume its wrong? Sorry, I never learned anything in life by ignoring firsthand experience. Even someone who thinks they know everything about a certain topic can sometimes find out that there's something new to learn. So keep an open mind.

BKB

Let me see if I have this right here:

6 posts
Knows how everything works
Asks the questions
Only wants answers that fits a particular opinion
Borderline rude

I think I've got it.

There is a huge difference between keeping an "open" mind (which most all of us have), and attempting to figure out how to game the system. Just when you think you have the rat race figured out, along come faster and smarter rats. The days of EZ credit are past us.

Perhaps you should do your homework on a person like HHM and explore just how helpful he is and always been to posters. You might not like what he has to say, but he is normally spot on with his answers.

I am finding your tone rather offensive......

[kawh]

Bkburger, I have to agree with Logan, the companies just aren't doing the automatic increases anymore, even before my balances were run up, they had stopped. Ever since 2008, the limits have only decreased.

Some say what you charge and where, has just as much to do with it as the amounts and when. Such as shopping at high end stores for fairly big ticket items, then paying off the balance every month. If you start to get mailings or offers for special deals and discounts from places like Bloomingdales and Pottery Barn, you're good. With Capital One, tho, that probably won't happen. I am not familiar with the BMW card.

[Amy26]

Well to say there are not "anymore" automatic increases is not accurate. The OP is partly correct in that if you show active use of the card the bank/institution is more inclined to extend you more credit. On the other board that I circulate on, someone just posted about Partners Federal Credit Union would only raise his limit to 7k while he had another Navy Federal Credit Union card at 43k and he asked them why they would only raise him to 7k. They told him that they needed to see more use on the card before they would consider a higher limit. However, do not expect Orchard or Capital One to give you an increase. They are notorious for leaving people exactly where they start out for all eternity (unless you have the capital one credit steps, and then you will only get 2 or 3 increases ever). If you want to have cards that grow with you, you will need to get some cards that are considered more "prime".

I hear everyday on the boards of people get automatic increases on store cards and various major credit cards. If I based it solely on my own experience, then I would say auto limit increases do not exist because I have had to initiate all the increases I have received.

In regard to the OP's question, you do not want a maxed out credit card reporting on your credit (as Logan suggested). You want your overall utilization to be at or below 10% and never more than 20-30% reporting on any individual card at one time. You also want to limit the number of cards that are carrying a balance.

From personal experience, I have not had to show huge usage on my cards to get increases. For example, my navy federal nrewards visa started out at I think 8k a little over a year ago. Every 3-6 months I have requested increases on the card and it is now at 30k and it was converted to a Visa Signature. I charge little things on the card... pay it off right away... I have never maxed the card or ran huge balances through it just to get an increase. So, while you need to show that you are using your cards... you by no means need to be running up the max all the time.

[bcss]

My recent personal experience is utilization percentage will tank your score. I was discharged from Bk last October, February I got a HSBC card with a $300 limit, I have only used it for small items and paid it off each month. Last month I bought some clothes online for $160 plus a couple of small purchases. So when I got my statement I owed $189. I checked my fako credit score, it went down from about 660 something to about 630. Nothing had changed, just utilization went up to 63% of my credit limit. I of course paid it off right away. I just wanted the protection of a credit card for a online purchase.

Personally I'm more worried about my financial health than my credit score. Save money for a rainy day, etc. In time it will improve on its on own. I have no intention of doing the same thing that lead me to file BK in the first place. I hope you listen to the advice given here, but if you don't you don't. Just hate to see you back here in a couple years talking about how you file another BK.

[SMinGA2]

Some subprime cards have policies against limit increases, or where the only increase is a minimal one. Orchard and Capital One might not be able to grow.

[Postbankrupt]

Maxing out your cards each month and paying them off won't help your credit score much as it will show you are using 100% of your available credit. In order to raise your credit score and get a credit limit increase, you should only utilize a percentage of your available credit. When you max your cards out it shows credit card companies that you are at risk of maxing out whatever cards you get thus increasing your chances of filing bankruptcy again in the future. Try only using 50% of your available credit each month and paying that off and see if that helps.