How important are credit limits?

[Swapmeet]

So I have a simply cash card as well as a couple Amex revolvers. I was wondering if I should use my cli for this 6 month period on my simply cash so that potential creditors of my company see a nice little 15k line, as opposed to a 5k line. What do you guys and gals think?

[Creditaddict]

I don't think the CL's matter really for business.

especially when you are talking about creditors that you PG because that's all they are going off of is your personal credit.

[Swapmeet]

I mean, I would like my firm to stand on its own--without the need to pg everything. But having said that, I can PG everything. I really want to find a way to build my company credit to the point that it can acquire mortgages to buy income producing real estate.

[Creditaddict]

I think it needs a balance sheet more then credit lines... Cash is there, loans will come

[navigatethis12]

American Express hasn't reported to Equifax, Dun and Bradstreet or Experian for me. So they may not report anywhere anyway.

[Swapmeet]

Interesting..... I understood that Amex does report to business credit (ie exp and DNB).

[tpatterson2k9]

Swapmeet,

I work for a firm that is involved with business financing and leasing, and in my experience, the higher your CC limits, the better.

There are several reasons behind this:

   1) Commercial lenders will want to see that you have greater than 25% of your total revolving credit available. Above 40% revolving credit available is ideal. The higher the limits, the better your % of revolving credit available (unless you start using more of it).

   2) If you had previous CC debt charged off, lenders will want to see that you have rebuilt your CC limits since the BK/chargeoff. Ideally, they want to see that your new CC limits are close to or greater than the amount you had written off.

   3) Higher limit CCs show business lenders that other creditors were willing to extend you higher limits, so it makes them feel more comfortable about extending near the same amount to you. Though CCs help show comparable credit, it is best to have comparable installment credit (auto loans, HELOCs) near the amount you are looking to take down.

Please note that though student loans are seen as installment loans, they carry much less weight toward your comparable borrowing history than auto loans or other business loans or leases.