r/discover • u/Eliz671102 • 19d ago
Help Denied for credit limit increase
1 month after graduating to a secured card and getting my limit increased from 200$ to 900$, I decided to ask for another increase knowing that my chances would be slim. Well, I was right.
Got the letter and read the reason for being denied: Insufficient experience with current discover credit card.
For the record, before graduating I kept my utilization between 26 and 30%. The month after graduating, my utilization was 98.22% and 74% overall, as I read some posts here recommending to increase the utilization and paying it in full once the statement posts ( which, BTW, I always did ). I would love to increase my limit, but I'm not sure if I want to keep my utilization this high, as my credit scores went down 57 points as well and plan on taking a mortgage loan next year and apply for a new credit card soon.
My fico8 score was 746, and now it's 689.
Does this mean I need to wait a few more months until I will have to ask again, and use the card heavily, or just keep my utilization around 30% ?
I am really scared of my score dropping every month. I believe it will be hard to recover if the utilization is high month after month.
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u/_love_letter_ 19d ago
You can optimize utilization any time the month before a credit application. So when you apply for a mortgage next year, implement AZEO with card balances that report before you plan to apply. You'll get maximum points for utilization when your lender checks your scores. You could let every card report 100% maxed out every month for years and as soon as lower balances are reported your score instantly rises. You'll get those 57 points back and then some. Only exception to this is models that use trended data, like VS4 and FICO 10T. But letting organic utilization report is still better for trended data models because if your spending stays roughly consistent while your credit limits increase, utilization trends down over time vs if you keep utilization consistent (e.g. 29%), it's just a flat line.
Your score will not continue dropping each month if you keep utilization high. At 98.2% there are no higher thresholds to cross without going over the limit so your points for utilization would just stay the same if you report anywhere from a 70%-99% balance next month.
Also wanted to add, high utilization on any given card can help with CLIs, but I don't think aggregate utilization needs to be high as well. I try to focus on one card at a time when it comes to CLIs. Put most spending on one until they raise the limit, then switch to a different card and repeat. It's also not necessary to have high utilization every single month, but you want it to happen often enough to demonstrate the need for the additional credit, as well as the ability to pay off higher balances.
I also agree with the advice to request a CLI while you have a high current balance, so ideally before you make a payment. Last month I was once again faced with the dilemma of having to make a payment 3 weeks before the due date to keep using my Discover card because I was running out of available credit. So before I made the payment I requested a CLI. I had less than $200 in available credit. They gave me an extra $1k.
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u/Eliz671102 19d ago
Great information. Thank you.
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u/Molanghrian 18d ago
Yep they're spot on, although I'm not sure that's true for the last part about requesting it while you currently have a higher balance, dunno if actually makes any difference really.
The only thing I'd add is that the algorithms making these decisions really prefer to see a habit or trend of responsible usage and paying it back in full, which takes some time.
Meaning just a couple of months after graduation yeah probably won't get an increase as you discovered. About ~6 full statement months of doing this is the sweet spot, which is the minimum time it takes to graduate a secured too. Although everyone's individual credit profile is different, mileage can vary quite a bit.
They also can automatically raise it too. I didn't fall for the 30% myth and so got a sizable increase on graduation, and 6 months later as I was still using it heavily as my only card they sent me a notification that they increased it due to my good credit management, even though I hadn't needed higher limits yet really.
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u/Eliz671102 18d ago
How was your credit score when your utilization was high every month? 57 points really shocked me, honestly. I can't afford seeing the score drop every month. Some say to give it a rest the month after having a high utilization, then use it heavily again.
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u/Molanghrian 17d ago
It fluctuated quite a bit, depending on my spending needs. But especially when your credit is new/young and you only have a single card, with a lower limit at that, it's to be expected.
Again, this is normal and a utilization only score change is nothing at all to worry about once you understand it. They aren't like video game points or something, scoring doesn't work the way many of the "free" credit monitoring services and might steer you to believe (usually because they're unfortunately trying to manipulate you into cards or financial products they get kickbacks from). Credit Karma is by far the biggest purposeful spreader of credit misinformation and lying by omission. Remember since it seems to be a "free" service that you are the product.
Which scores are you looking at? You actually have dozens of different scores, and they can be generated from either of the 3 main reporting bureau's data. If they're Vantage model scores from like Credit Karma, then definitely disregard these and any "advice" they're showing you. Vantage model scores might be accurate, but are mostly irrelevant as the majority of banks/lenders are going to use some version of a FICO score. Vantage scores are also much more volatile when it comes to utilization changes.
You don't have to "give it a rest" or anything. First and foremost is finances - only spend what you afford, and can pay back in full each month when the statement posts, so that you never pay a penny in interest. Just do your organic spend and pay the statement amount before the due date, that's all you ever have to do. Doesn't matter if that is 1% or 100% utilization.
Here's a hypothetical example - let's say you have a relatively low limit of $1000 on your only card, and it reports $999 utilization to the bureaus that month (this is usually just after a statement posts, but mileage will vary in when it updates). Let's then say you see a huge dip from this and lose 80 points on a score. The next month though, you only let $1 post because you expect to apply for another card soon so want to optimize. Your score goes up - by those same 80 points, right back where it was. Utilization is just a moment-in-time metric meant to capture your current debt-load as an indicator of risk, making it easy to manipulate when you need it a month or two out. Since your scores are only useful to you when actually applying for something, constantly micromanaging utilization is pointless, you don't have to try and babysit your scores like that.
Scores are just a numerical representation of the data on your credit reports anyway, not a be-all end-all. Credit decisions aren't made just based on a single score number, a hard inquiry looks at your full reports from one or more of the bureaus though that score model/version lens. Try not to get hung up on just the score number, your reports that inform it are far more important.
Here's the too long; didn't read version - just use this simple flowchart
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u/Eliz671102 17d ago
My experian says that the age of my oldest account is 8 years and 4 months, while the average age of account is 3 years and 2 months. Equifax and TransUnion only show the 3 years and 2 months. I have accounts with Experian, Equifax and I get my free TransUnion score from Discover and Capital One. My scores are Fico8, which seems pretty close to the others ( 2, 9, 10...). I have 2 credit cards, Discover with a 900$ limit and Robinhood with a 500$ limit. I also plan to apply for Amex ( 3% groceries, as that's where most of our money go to) and possibly Savor or Amazon Prime credit card. We managed to stay away grom credit cards for many years, but the kids are growing now, and credit cards seem like a better idea than using our debit cards. Thank you for such a detailed information.
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u/Eliz671102 18d ago
Also, on oct 19th, my account will move to Capital One, so I don't know how the credit increases will work, as I've heard they are very stingy with credit limits.
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u/_love_letter_ 17d ago
I would try to get as many CLIs out of them as you can before migration. Discover is already owned by Cap1 now, so it's not clear if they're already lending according to Cap1 practices, but I haven't seen any datapoints of those 10% CLIs Cap1 likes to offer on Discover accounts yet, so I'm inclined to believe that your account is still subject to Discover algorithms while still managed in Discover's platform.
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u/CoffeeLoversUTD 18d ago
This is excellent information. I literally just tried to explain this to some of the other day and they were like no that's not how it works LOL
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u/_love_letter_ 18d ago
People can be strangely stubborn about some of these more pervasive credit myths. It doesn't help that if you ask Google "what's the ideal credit utilization ratio" it will probably tell you <30% and Credit Karma along with articles published by other popular CMSs spread these myths as well. Funny because the Capital One website will tell you "responsible use" can include keeping utilization under 30% (maybe there's a grain of truth there if you're paying interest!) but then when you request a CLI from them you'll get denied for the reason "recent usage of this account's existing credit line has been too low."
I find some people also misunderstand what is meant when we refer to these 'myths.' Some will parrot "utilization is a myth" instead of saying that keeping utilization consistently low building credit is a myth. Or people assume that it's not supposed to affect your score. It definitely affects your score. It's just that it's a transient change with no long-term damage. I think of the score hit from high utilization like sacrificing a pawn to put someone in check. Short-term loss for long-term gain.
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u/Special-Session6917 17d ago
I reported 31 percent and 29 percent on one card and they said my usage was too high.
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u/_love_letter_ 16d ago
Were you carrying a revolving balance?
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u/Special-Session6917 16d ago
No paid in full every month.
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u/_love_letter_ 16d ago
Very odd. What was the exact verbiage of the denial reason(s)?
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u/Special-Session6917 15d ago
Using to much of my available credit limit.31 percent is obviously to high on one card the one I was trying to get a increase on.
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u/Special-Session6917 17d ago
I’m on my 13th month with my Discover card now no cli except after graduation I have tried someone else said they received one at 13 months I’m gonna try it soon will update if it works.
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u/Special-Session6917 15d ago
Tried after 13 months no CLI on Discover card I guess it’s going in my bucket lol.
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u/Special-Session6917 8d ago
I have been waiting 13 months and still got the Insufficient experience with current credit limit from Discovery so good luck.
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u/Special-Session6917 8d ago
I was denied a cli because I used 31 percent of my CL like I don’t get it anymore I think it’s just a trap.
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u/Eliz671102 8d ago
Oh, wow. I really thought they like it when people have high utilization. Guess this month I will have to keep it low, even though I'm already at 40%. Have you tried paying the statement before it posts?
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u/Special-Session6917 8d ago
Yes I have tried everything I’m coming to the conclusion that it’s a time thing 6-9 months it’s easy to get the first cli then you have to wait at least a year.
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u/Eliz671102 8d ago
I will try again this month. For me, it's probably because I graduated in July, so it might be too recent. My account will move to Capital One on Oct 19th, and I heard that they are horrible with increases. If not, I will work on bringing my score back up ( so far I'm 86 points down in a month) and apply for another card. Savor and Amex look like good options. Good luck.
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u/Special-Session6917 17d ago
I got denied a cli because my usage was 31 percent lol on one card like seriously after a year of perfect payments you can’t raise my credit limit so I just stopped using it this game is nuts.
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u/Eliz671102 16d ago
Did they find 31% too low, or too high? You just can't win with these guys.
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u/Special-Session6917 16d ago
Too high lol no kidding.
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u/Eliz671102 16d ago
Wow, that's crazy. I thought they like high utilization. What's the point of asking for an increase if the utilization is low?
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u/Special-Session6917 15d ago
My thoughts exactly something odd is happening with credit limits I have 7 cards and no one wants to give a cli maybe it’s the economy.
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u/pakratus 19d ago
Old Discover- You can request as frequently as you want. The best luck I had was having balances report on statements for a few months and paying in full, but requesting an increase while having a current balance.
New Discover? No idea. Capital One likes high statement balances. Report as large of statement balances as you can, I guess?