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Reallocating Your Credit Limits / App-O-Rama Update

By February 20, 2013 December 10th, 2013 3 Comments

App-O-Rama Update

Back in November, I did my 1st ever App-O-Rama and racked up around 440,000 Miles & Points.

I first heard about App-O-Ramas way back in 2009 when I first joined the Community but was too scared to try one because I had just graduated College.  My thinking was that no Bank could be that dumb to approve that many Credit Cards to one person.

Well in November, I finally sucked it up and decided to give it a try, as it seemed that it had worked flawlessly for everyone else.

At the time I was concerned about what effect applying for 8 Credit Cards would have on my Credit Score.

Logic would dictate that applying for 8 Cards would kill your score, but from my research I was fairly confident that my Score would remain the same or increase due to all the new Credit I was receiving.

Well I am happy to announce that after 4 months, I have received all my 440,000 Miles & Points and my Credit Score is basically the same as it was pre App-O-Rama.

I used my 2 favorite FREE sites Credit Karma and Credit Sesame to check my Credit Score. I’d recommend checking your Score every month since it is free!

There was one weird dip in my score, as you can see, but I will explain that below.

As you can see, I now have 17 open Credit Cards (15 Personal Cards + 2 “Business” Cards) with 9 Banks.

  • American Express: 2
  • Bank of America: 1
  • Bank of Hawaii: 1
  • Barclays: 1
  • Capital One: 2
  • Chase Personal: 4
  • Chase Business: 2
  • Citibank: 3
  • Discover: 1

I have a total of $69,450 in Credit across those 15 Personal Accounts, with a Credit Utilisation Ratio of 6% (mostly “fake” spend via Amazon Payments and Bluebird)!

Reallocating Your Credit Limits

If you look above at the Credit Karma graph, you will see a LARGE 20 point dip in my Score at the beginning of January.

At first, I thought it was related to my App-O-Rama, but that took place at the beginning of November so I didn’t think it was that. I couldn’t figure out what it was related to until I looked at my Credit Utilization Ratios for Chase!

For anyone that has a ton of Credit Cards with Chase, you know that Chase gives you a TOTAL AVAILABLE CREDIT LIMIT across all your Cards. In my case, it is $21,900 (not including Business Cards) for all my Personal Cards.

Every time I apply for a new Chase Card, I tap into that $21,900.

For some reason, Chase doesn’t distribute Credit very evenly between Cards.

Well since I have 4 Personal Chase Cards, for my last Southwest Personal Card, I only got a $2,000 Credit Limit.

For some reason or the other, Chase’s website messed up and showed me the wrong Statement Closing date. I ended up spending $1,500 on the Southwest Card thinking it would post in 2013. Instead it posted in 2012 and is the reason why I am currently without a Southwest Companion Pass!

Normally that wouldn’t be a big deal (except for the Companion Pass), but because Chase showed me the wrong Statement Close date, I didn’t pay off my Outstanding Balance before my new Statement was issued.

So my Credit Utilization Ratio shot up to 75% or $1,500 of a possible $2,000 in Credit!

Needless to say, my Score took a dive at the beginning of January!

This is where Credit Reallocation comes into place, so this doesn’t happen again.

Chase Pre-Reallocation Limits:

  • Sapphire: $5,000
  • United: $13,500
  • Chase Freedom: $1,400
  • Southwest: $2,000

While the Limits on the Sapphire and United Card are fine, the Southwest and Chase Freedom Limits are pathetic.

The Solution

To fix these low Limits, I simply called up Chase and said I needed to “move some Credit around”.

They were happy to help and asked what I wanted to move around.

I told them instead of the current distribution, I wanted to have an average of $5,000 in Credit on each Card.

They transferred me over to the Lending and they took care of it.

There is NO HARD PULL for this, since they are moving around Credit you already have.

After Reallocation:

  • Sapphire: $5,000
  • United: $5,500
  • Chase Freedom: $5,400
  • Southwest: $5,000

The advantage of this is now when Chase reports to the Credit Agencies, for my Southwest and Chase Freedom, the new Credit Limit will be $5,000+ instead of $2,000 and $1,400. Also in the event that I use the Cards, it will be much easier to keep my CUR low.

Below is my Chase Freedom Account from my official Trans Union Credit Report, which you can get for FREE every year from the Government at AnnualCreditReport.com. I highly suggest you do this!

As you can see, at some point my Credit Limit on the Card was much higher than $1,400, but when I moved Credit around a few years ago, it got reduced to $1,400.

By reallocating my Credit and increasing the Limit on the Card, in my Official Credit Report it will now show that my Credit Limit on my Chase Freedom is $5,000, instead of $1,400.

Recap

Credit Utilization and proper management of your Credit is probably one of the least sexy and boring topics in the World, but it also one of the most important!

Tricks like evenly reallocating your Credit and keeping a low Credit Utilization Ratio are what allow us to keep a high Credit Score all while racking up hundreds of thousands of Miles for FREE!

If you have any questions about this or anything related to Credit, feel free to leave a Comment or Email me!

-Parag

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3 Comments

  • HansGolden says:

    Are you trying to say that the high balance as percentage of credit limit is a factor in your credit score?? I've never heard that before…

  • HansGolden says:

    I've consulted other credit authorities and they agree that it is wrong to insinuate the historical high balance has any effect (except for the exception I'll explain below) on your current credit score. The only thing that matters is your current balance as a percent of your credit limit.

    The only time the historical high balance affects your credit report is with no preset spending limit cards where no credit limit is reported. In that case, the higher the historical high balance is, the better, because that's what the credit agency uses as a stand-in for the credit limit on that card. The higher your CL, the better you credit utilization ratio.

  • Frequent Flyer University says:

    @HansGolden – Thanks for your feedback Hans. That is not what I was implying but I will clarify in the post.

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