When applying for a credit card, you supply the bank with some information about your income and expenses, then they offer you a credit card with X limit. Obviously X here is determined by income, expenses and past credit history.
I'm wondering if anyone here has some insight or experience (i.e. you've worked at a bank approving credit card applications) into the process. I'm not looking for exact formulas, obviously everyone's situation varies, but what are some general guidelines that get used to determine whether or not (and how much) credit you'll offer someone?
e.g. assuming someone has good credit history, no loans or debts, they earn $x per week and their expenses are $y per week, would their max credit limit be ($y-$x) times 10? times 20?
If you have existing credit cards, obviously the limits on them count. If I already have a credit card with a 10k limit, is that treated the same as if i owed 10k on a loan?
Would someone who already owns a lot of credit cards but with low limits (say, three cards at $3 limit each) look worse than someone who already owns one credit card but with a higher limit (like $10k)?
I can't answer all of the questions, but you are right that banks treat any cards you already have as if they are full used, it has to do with potential debt. They have a 'responsibility' (I use that term lightly) to ensure you can reasonably pay back the amount of money you owe them.
I think each bank will have a slightly different formula, and there is very little human decision making in it these days.