# Credit Card increase denied: what went wrong?



## johnc (Apr 15, 2012)

Apologies if this has been discussed before, but I am confused about how credit limits work.

Mid 30's, immigrated to Canada 10 years ago. Currently hold a $5k limit cashback Scotia credit card that I pretty much use for everything, but never carry a balance. (My investments are with Scotia iTrade.)

I'm looking at making a large purchase on the card and wanted to double my limit to give some breathing space, but was told that I had hit my limit for unsecured borrowing. (Not intending to carry the balance, just use the card for inital payment)

What makes this stranger is I recently talking to the bank about preapproval for a $400k mortgage and was pre-approved for $1m (which I found ridiculous). I know one is secured, but still seems a bit inconsistant. What are the variables that make me a credit risk for limit increase?

Thanks!


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## Daniel A. (Mar 20, 2011)

Your pre-approved for $1m could be the problem and tie up your ability for further credit.

The bank effectively has blocked your ability to go somewhere else for credit.


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## sags (May 15, 2010)

If it is the limit for "unsecured" borrowing, it may be based on your stated income. 

Are you self employed? Have you listed all your sources of income with the bank?


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## Ag Driver (Dec 13, 2012)

Have you increased your credit card limit recently? I am pretty sure that my cards are in the range of 6 month intervals between credit increases.


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## MRT (Apr 8, 2013)

Daniel A. said:


> Your pre-approved for $1m could be the problem and tie up your ability for further credit.
> 
> The bank effectively has blocked your ability to go somewhere else for credit.


That is almost certainly not the case...

A pre-approved mortgage does not show on your credit report and is only an internal bank document. Other banking divisions (retail, credit card, etc.) should not even have access to it, or even have knowledge that such a pre-approval was issued. If they do a hard hit on the credit report (and they typically do soft hits for credit increases), they would only see an inquiry from when the pre-approval was done, that's it.

Regardless, even if that info was shared throughout the bank, a pre-approval means NOTHING. It is a rate hold, nothing more, and should not in *any* way impact your ability to borrow internally or externally from that bank. It isn't a liability or even a firm indication you will buy. Banks hand them out like candy.

johnc, the notion that you have hit a wall with unsecured lending at 5k is a completely b.s. response from the bank. Escalate it higher, or apply somewhere else.


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## johnc (Apr 15, 2012)

It's got me stumped, glad it's not just me.

FWIW I've been with my company for 6 years (4 as contractor, last 2 as fulltime), 6 figure salary. I'll go bother the bank in person on Monday and see what's up.


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## james4beach (Nov 15, 2012)

Give scotia one last chance to do what you want, then go and apply for a credit card elsewhere. These are the benefits of a competitive marketplace.

It's ridiculously easy to apply for credit cards online. You don't have to leave your home, and the new card you'll get from elsewhere will likely have a limit higher than you need.

Something similar happened to me. I requested PC Financial increase my limit from $1000 to $2000, and in response they only increased it to $1250 (which is somewhat of a joke). So I applied online for an MBNA World card, and that new card came with around $10k limit or something (can't remember... I had to reduce it). Now I use the new card for virtually all spending, and hardly touch the old one.

This is not a question of income, by the way. Even people who are borderline broke get credit card offers in the mail all the time.


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## liquidfinance (Jan 28, 2011)

Similar situation here.

RBC gave me a $1k card when I moved here last year. I was happy this was unsecured to allow me to start building my credit. 
Requested an increase after holding for around 8 months and got it doubled to $2k and they gave me a $1k limit Rewards Visa card. They made me laugh by asking why I needed a limit over $1k. 

Anyway a couple of months back I applied for the Amazon visa and that came through with a $7k limit. Instant approval online. I've heard of people having similar situation with the big banks and often finding it better just to apply for a card with an alternative provider.


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## peterk (May 16, 2010)

This has got to be a mixup. You should be able to get a higher limit than that no problem.


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## jcgd (Oct 30, 2011)

I've heard it can be harder to get higher limits if you never carry a balance. For the reason that there is no reason for you to be extended credit if you aren't making the company any money. Any truth to this?

I find it much harder to get credit when I make 10x my partner's income and I pay all the bills. She is a full time student and makes under $10k and gets credit offers all the time.


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## Plugging Along (Jan 3, 2011)

jcgd said:


> I've heard it can be harder to get higher limits if you never carry a balance. For the reason that there is no reason for you to be extended credit if you aren't making the company any money. Any truth to this?
> 
> I find it much harder to get credit when I make 10x my partner's income and I pay all the bills. She is a full time student and makes under $10k and gets credit offers all the time.


Nope. No one in my family has any balance on their credit cards ever, we all have been able to get huge credit card limits. 

The credit companies still make money off you indirectly thought the merchants fee. Maybe if you don't carry a balance, and don't use it?

OP - have you called the company and asked they why?


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## jcgd (Oct 30, 2011)

I wasn't sure if that was true or not. I haven't had much trouble myself, my bank gives me darn near whatever I ask eventually. I just have to sweet talk sometimes. I use my Visa heavily. I haven't had a transaction on my debit in months and I rarely have cash. Just a bit of change in my backpack and car for when I really need cash.


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## alingva (Aug 17, 2013)

*how credit history/limit works*

When you call to increase your limit you can be preapproved or they have to do a quick application and the app might be declined due to credit history or TDS ratio (Total Debt Service ratio)



> While the credit score formula (Beacon score) is kept secret, the score is based on (roughly):
> 35% is based on repayment history.
> 30% is based on existing debts
> 15% is based on age of accounts, the longer credit accounts have been opened the better. It is a good idea to have 3 different accounts (loan, credit card, line of credit) over 1 year old each.
> ...


from this site http://moneyinside.ca/forum/viewtopic.php?f=4&t=121


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## johnc (Apr 15, 2012)

Thanks for the replies all. 

Now this is really bugging me. I ran a credit report through Equifax, everything seems fine (credit score of 780). Maybe because I'm a cheap-*** with a 2% cashback card & no balance I'm not a desirable demographic?

Seems the best solution is to get a second card, but it's would be a lot simpler if Scotia could just stop being so stingy with their money. 

Will bother the bank on Monday and see what's going on.


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## KrissyFair (Jul 8, 2013)

Honestly, in my experience banks just make no sense on this point. When we were planning our wedding I phoned the bank to let them know there would a large transaction - within our limit but unusual for us so I didn't want it to get flagged - and her response was sure, and while I've got you let's increase your credit limit from 10k to 25k! Um, no, thanks. But then when it was mortgage time, we almost got denied because I had a $69.00 balance on the credit card I hardly ever use. Our lawyer laughed when he saw that closing that card was a condition on the mortgage approval.

So ya, I'd take that up with them. Or go elsewhere. Try TD, they'll throw $25k your way just for calling :biggrin:


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## alingva (Aug 17, 2013)

Credit history is only one of the things banks want to see in good standing. Income, assets, utilization ratio and previous credit checks are important too


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## Canadian (Sep 19, 2013)

The risk metrics are different between secured and unsecured credit. This could be one of the issues - if it is then you won't know until applying for a different credit card.

Some of the credit card companies can be unnecessarily difficult - especially when going through one of the big banks. When I'm helping clients at my job and I have to deal with the credit card company, half of it depends on the specific agent processing the application or who I speak to. If you notice a reduction in deliquincies over the past year or so, it isn't because customers are "acting" any better, it's because credit card companies are really pulling up their socks with the approval process. Sometimes I wonder if agents' performance has any "deliquincy" measure. Some may argue this, but there is certainly employee discretion beyond the computer's risk calculation.


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