How do CC determine whether to approve credit limit increase?

I used to have a Chase CC back in college (about 9 years ago) and I remember they used to “jack up” my credit limit almost randomly.  Started off with a $3000 limit and within 5 years, the credit limit had increased to $13,000.  Unfortunately, I was young/immature/naive and got myself into financial trouble with the high credit limit (couple 90+ day and a handful of 30+ day late payments).  I ultimately enrolled in a credit counseling program and eventually paid off the CC debt.  However, one of the requirements for enrolling in the program was that the card would be canceled. 

Anyway, I’ve greatly improved (not perfect, but trying to get better) in managing my finances since my college days.  I have not had a late payment in nearly 2 years and successfully raised my FICO score from about 528 to 691 (TU) / 678 (Equifax).  I currently have 2 CCs with credit limits of $3500 (Capital One; opened 11/2006; 2 30 day late payments back in 2007) and $500 (Barclays Bank; opened in 6/2007; 1 30 day late payment back in 2007).  Currently, I carry no balance on the cards, but I have maxed out the cards in the past.  

Right now, my current yearly income is about $24K (grad student).  When I graduate this May, I’m expecting my starting salary to be at least $40K (depending on whether I go into public sector or not).  I would like to buy my own home within the next 2-3 years and therefore, trying to find ways to further improve my credit score.  One of the “negative” factors on my report is the high use of revolving credit limit in the past and so, I’m hoping to increase the overall revolving credit limit.  I have asked both my CC companies in the past (1-2 years ago) for a credit limit increase and have been denied. 

Sooooooooo my question is how do CC companies determine whether to approve credit limit increase or not?  Considering both the increase in salary and the improved FICO score compared to when I last asked for an increase, will I be more likely to be approved this time around?  I’ve read on here that asking for a credit limit increase could result in a “hard” inquiry, which could result in a slight drop in FICO score.  Therefore, I would like to avoid a scenario where I’m not only denied for an increase, but also where my FICO score decreases.  

Along these lines, is it easier to be approved for a credit increase or for a new card completely?  Obviously, I’d like to avoid opening a new CC account, if possible.

Thanks in advance for all your help.

P.S.  Oh by the way, I do have student loans (~$100K) that are currently in deferment and am planning to enroll in the income-based repayment option (~$275/month) should I take a job in the public sector.  Not sure how this might play in determining whether I’ll be approved for an increase in credit limit.