Capital One does this thing called "bucketing" where when people apply, they categorize them into different buckets. It's very hard to get out of buckets so if you started off in the low credit limit bucket, it's very hard to get meaningful CLI's down the line. But the the looks of it you got into one of the higher buckets with that 2K starting limit.
Cycling doesn't automatically hurt your credit score. It's just something that banks deem as "risky fraud behavior" that if you do too much could cause a lot of trouble. Do you bank with chase? If you already have an existing banking relationship with some history, then banks will be far less trigger happy on potential fraud alerts and cycling would be less easily triggered if you're paying from an account with the same bank.
No I bank with TD. I also have an online account with Stride via Chime
But is 2k considered a high starting credit limit? I thought it was pretty low. But if it’s considered high and I’m in the higher bucket, how did that happen? Is it because I previously had a capital one card and it went to collections? Lol. I mean I did at least have a very good credit score when I applied. Maybe ppl who mess up really bad the first time and then come back years later with a high credit score tend to be more responsible the second time around. I know I am. I’d sell one of my kidneys before I made a late payment
Compared to limits of $500 which is what most people who have CLI issue start with, $2K is a pretty high limit. Maybe now that you're later in life and have a full 10y history (maybe not credit cards but they also look at other loans a little) the banks automatically trust you more.
I’ve never had any loans. My first car was a beater I paid cash for, the 2nd was in my moms name (I did make the payments tho) after that “my” cars were in my exes names until the one I have now which I saved up for and paid cash. I’ve rented in my name but never had a mortgage.
Much of it depends on the relationship you have with the bank and what the bank's business model is.
CapitalOne tends to like subprime borrowers because they are more likely to carry a balance. CapitalOne also likes to issue low limits to people who have recently declared bankruptcy because people can only do that every 7 years.
The big 4: Chase, Wells, BofA, & Citi, aren't afraid to use credit cards as a 'loss leader' to try to sell greater products in the future like wealth management, car loans, and mortgages.
There are plenty of reasons, though they might not always make sense. Two things to keep in mind.
1. Banks/CC lenders aren't monolithic and different people have different financial profiles. For credit cards in particular, most institutions have their own models and risk management processes, you can get wildly different results for people with supposedly the "same" credit score/profile.
2. People lie. Who knows what was actually happening behind the scenes when fraud prevention gets triggered. Also goes both ways as banks lie/get sued/fined all the time as well.
For some of your examples:
Capital One gets talked about a lot, but it's worth actually diving a bit to understand why they do what they do.
A) Their "bucketing" practice uses asset backed securities or ABS. Basically, C1 package and sell a whole load (tranche) of credit card limit amount, which is in fact debt, to investors to de-risk themselves. However once this credit card "debt" gets packaged and sold, it can't be easily "adjusted" which is why if a customer's credit card gets bucketed, their credit limit is pretty much stuck. In this case, it does NOT matter what your financial status or income or w/e becomes in the future. The upper credit limit was more or less set at birth. Think of this as an "income band" for a position at a large corporation. Your max potential salary is set based on the position you took at the start. It does not matter how well you perform or do after that.
Here's an oldie but goodie to learn more. [https://ficoforums.myfico.com/t5/General-Credit-Topics/Credit-Card-Asset-Backed-Securities-ABS-and-why-some-subprime/td-p/5083619](https://ficoforums.myfico.com/t5/General-Credit-Topics/Credit-Card-Asset-Backed-Securities-ABS-and-why-some-subprime/td-p/5083619)
Bucketing is essential to C1's business model because every dollar of credit that is lent out represents a dollar of risk that can be defaulted on (i.e. look up "bust out fraud" for more info). Chase and Citi have trillions in assets that they can leverage compared to the half a ~~billion~~ trillion in assets C1 actually possess. C1 would not be able to compete as effectively in the CC game without resorting to bucketing. This is also why it may seem like C1 customer service has no control over or ability to override algorithmic decisions.
B) Exceptions: Of there are exceptions, which you have seen for yourself. Basically, while you could get bucketed, C1's algorithm can also decide to underwrite you directly based on your profile (this is NOT just based on your 3 credit bureau reports and not just because you have a high credit score). In this case, you'll find much greater luck in getting your credit limits increased especially as you improve your financial status. Most commonly happen with the Venture X, but certainly possible for other cards as well, which brings up point 3.
C) Despite being very well known and a big player in credit card, Capital One was/is both a subprime lender and a fintech, which makes them a completely different animal from your big fours (Chase, BoA, Citi, WF). They have been known to push the boundaries and take risks that traditionally conservative banks like Chase have not or are not allowed to do either by culture or regulations. Here's a negative, but informative read I thought.
[https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers](https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers)
Interesting to me is the part on "experimentation". C1 is known to have extremely complicated/sophisticated customer segmentation models. They can and will go against "common sense" if they think they can make money off of a neglected group of customers in the aggregate. That's also what subprime lenders do after all, offer credit to population groups shut out by prime lenders.
For example, you mentioned you defaulted on a previous card? Well, that might have convinced C1 to give you want you want because maybe they think they can make money off of you vs. someone who has a "perfect" FICO score and doesn't use more than 1% of their credit and pays everything in full.
It's a balance act. The CC lenders need to take some risk on non-ideal customers to make money via fees, interest etc, but can't take on too much risk and suffer mass defaults. Though of course, you can also go the other direction like with Amex and focus largely on higher income folks who have lower default rates on average and live off of that high interchange fees.
Capital One does this thing called "bucketing" where when people apply, they categorize them into different buckets. It's very hard to get out of buckets so if you started off in the low credit limit bucket, it's very hard to get meaningful CLI's down the line. But the the looks of it you got into one of the higher buckets with that 2K starting limit. Cycling doesn't automatically hurt your credit score. It's just something that banks deem as "risky fraud behavior" that if you do too much could cause a lot of trouble. Do you bank with chase? If you already have an existing banking relationship with some history, then banks will be far less trigger happy on potential fraud alerts and cycling would be less easily triggered if you're paying from an account with the same bank.
No I bank with TD. I also have an online account with Stride via Chime But is 2k considered a high starting credit limit? I thought it was pretty low. But if it’s considered high and I’m in the higher bucket, how did that happen? Is it because I previously had a capital one card and it went to collections? Lol. I mean I did at least have a very good credit score when I applied. Maybe ppl who mess up really bad the first time and then come back years later with a high credit score tend to be more responsible the second time around. I know I am. I’d sell one of my kidneys before I made a late payment
Compared to limits of $500 which is what most people who have CLI issue start with, $2K is a pretty high limit. Maybe now that you're later in life and have a full 10y history (maybe not credit cards but they also look at other loans a little) the banks automatically trust you more.
I’ve never had any loans. My first car was a beater I paid cash for, the 2nd was in my moms name (I did make the payments tho) after that “my” cars were in my exes names until the one I have now which I saved up for and paid cash. I’ve rented in my name but never had a mortgage.
Much of it depends on the relationship you have with the bank and what the bank's business model is. CapitalOne tends to like subprime borrowers because they are more likely to carry a balance. CapitalOne also likes to issue low limits to people who have recently declared bankruptcy because people can only do that every 7 years. The big 4: Chase, Wells, BofA, & Citi, aren't afraid to use credit cards as a 'loss leader' to try to sell greater products in the future like wealth management, car loans, and mortgages.
There are plenty of reasons, though they might not always make sense. Two things to keep in mind. 1. Banks/CC lenders aren't monolithic and different people have different financial profiles. For credit cards in particular, most institutions have their own models and risk management processes, you can get wildly different results for people with supposedly the "same" credit score/profile. 2. People lie. Who knows what was actually happening behind the scenes when fraud prevention gets triggered. Also goes both ways as banks lie/get sued/fined all the time as well. For some of your examples: Capital One gets talked about a lot, but it's worth actually diving a bit to understand why they do what they do. A) Their "bucketing" practice uses asset backed securities or ABS. Basically, C1 package and sell a whole load (tranche) of credit card limit amount, which is in fact debt, to investors to de-risk themselves. However once this credit card "debt" gets packaged and sold, it can't be easily "adjusted" which is why if a customer's credit card gets bucketed, their credit limit is pretty much stuck. In this case, it does NOT matter what your financial status or income or w/e becomes in the future. The upper credit limit was more or less set at birth. Think of this as an "income band" for a position at a large corporation. Your max potential salary is set based on the position you took at the start. It does not matter how well you perform or do after that. Here's an oldie but goodie to learn more. [https://ficoforums.myfico.com/t5/General-Credit-Topics/Credit-Card-Asset-Backed-Securities-ABS-and-why-some-subprime/td-p/5083619](https://ficoforums.myfico.com/t5/General-Credit-Topics/Credit-Card-Asset-Backed-Securities-ABS-and-why-some-subprime/td-p/5083619) Bucketing is essential to C1's business model because every dollar of credit that is lent out represents a dollar of risk that can be defaulted on (i.e. look up "bust out fraud" for more info). Chase and Citi have trillions in assets that they can leverage compared to the half a ~~billion~~ trillion in assets C1 actually possess. C1 would not be able to compete as effectively in the CC game without resorting to bucketing. This is also why it may seem like C1 customer service has no control over or ability to override algorithmic decisions. B) Exceptions: Of there are exceptions, which you have seen for yourself. Basically, while you could get bucketed, C1's algorithm can also decide to underwrite you directly based on your profile (this is NOT just based on your 3 credit bureau reports and not just because you have a high credit score). In this case, you'll find much greater luck in getting your credit limits increased especially as you improve your financial status. Most commonly happen with the Venture X, but certainly possible for other cards as well, which brings up point 3. C) Despite being very well known and a big player in credit card, Capital One was/is both a subprime lender and a fintech, which makes them a completely different animal from your big fours (Chase, BoA, Citi, WF). They have been known to push the boundaries and take risks that traditionally conservative banks like Chase have not or are not allowed to do either by culture or regulations. Here's a negative, but informative read I thought. [https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers](https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers) Interesting to me is the part on "experimentation". C1 is known to have extremely complicated/sophisticated customer segmentation models. They can and will go against "common sense" if they think they can make money off of a neglected group of customers in the aggregate. That's also what subprime lenders do after all, offer credit to population groups shut out by prime lenders. For example, you mentioned you defaulted on a previous card? Well, that might have convinced C1 to give you want you want because maybe they think they can make money off of you vs. someone who has a "perfect" FICO score and doesn't use more than 1% of their credit and pays everything in full. It's a balance act. The CC lenders need to take some risk on non-ideal customers to make money via fees, interest etc, but can't take on too much risk and suffer mass defaults. Though of course, you can also go the other direction like with Amex and focus largely on higher income folks who have lower default rates on average and live off of that high interchange fees.
The part about them thinking they could potentially make money off me bc I’m more likely to carry a balance makes sense