cancel
Showing results for 
Search instead for 
Did you mean: 

CLI- When is too much... TOO MUCH?

tag
UncleB
Credit Mentor

Re: CLI- When is too much... TOO MUCH?


@sarge12 wrote:

@Anonymous wrote:
"I also believe it is a concern when going through a manual review on a mortgage as I've seen those on this board who were having to shed some credit limits to meet approval for mortgage lenders. I have not experienced this myself, so this tidbit is second hand info at best."

I have underwritten hundreds of agency conventional as well as jumbo loans for a nationally known lender, and I've never, ever heard of this.

I only heard of it from those who posted such on this forum...it may have been advice from a mortgage broker to get their scores up, I do not know. I just know they posted that they were having to ask for CLD's, and close some cards due to the mortgage they were trying to get...it is also why I said it was second hand info, and I have no verification that it is a real concern. If you are a mortgage underwriter, you would certainly know more about mortgages than I. I do know there are some here that have 70,000 dollars a year income, and have 40+ credit cards with nearly a million dollars in credit limits. If I was a lender, that potential debt would be a concern.


I've been throught the entire mortgage process four times (successfully) and I have a "past life" in real estate; I never experienced a situation where having too much credit was a problem or where a client was told to reduce their credit line(s), but even if it had happened it would have been trivial to comply... literally a phone call would have done the trick.

 

On the other hand... twice I was personally told by my own mortgage broker that I needed to have my credit lines increased which was a problem... none of my creditors at the time were agreeable to this for various reasons, not to mention several of them wanted a HP to even check.

 

My take-away from this is if you're in the market for a home, do not preemptively reduce your credit lines... if it were to be an issue you can easily reduce your available credit when necessary (i.e. when you're instructed to do so), but if you have the opposite problem it's a whole 'nother matter... and can be a real problem.

 

Just my 2¢.

Message 31 of 33
Anonymous
Not applicable

Re: CLI- When is too much... TOO MUCH?


@UncleB wrote:

@nenuco, you need to do what is right for your situation regardless of what is right for others.

 

That said, I'm sure none of your lenders would have a problem with reducing any of your credit lines at your request (that's not totally unheard of around here, although not extremely common).

 

Here's something I noticed in your posts, though... you have multiple lenders giving you very generous CLIs (and in at least one case, a generous SL), so that tells me you're definitely doing something right.  It also tells me it's probably not a 'fluke' and it's very likely your income and/or investments can justify those credit lines. 

 

Unless you're just losing sleep there's no pressing reason to self-CLD... I seriously doubt any of your lenders are worried about your high credit limits. 

 

Keep in mind also that "high" is both subjective and relative... while for my profile and modest income a $20k credit line is substantial, for others with higher income and investments (like perhaps yourself?) it's really not that high at all, and might even be considered a 'toy' limit.

 

Just my 2¢.  Smiley Wink


+1

Message 32 of 33
Anonymous
Not applicable

Re: CLI- When is too much... TOO MUCH?

There are folks with medium incomes but extreme credit limits overall -- some with 10X or even 20X income total limits.

 

One of the key elements you see consistently as to why they don't get CLDs seems to be that their credit report age is high to very high.  One of the key elements we tend to ignore when it comes to AA is overall age of your profile.  If you've got accounts that are 20 years old and no derogatories on your credit history, you're showing yourself to be an extremely low risk borrower.

 

I burned my credit in my 20s due to irresponsible living, and again my 30s due to divorce and losing a business.  So my profile is thin and young and I doubt I'd get crazy high CLs without some concerns from lenders.  But if I was my age with 20 years of perfect credit history, that would be a different story.

 

Thick files with aging = prime borrowers.

 

Thin files without aging = riskier borrowers

Message 33 of 33
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.