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Established Contributor
tennisfan78
Posts: 630
Registered: ‎09-18-2011
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How much Credit Limit should one aim for?

 

what are your thoughts on how much total credit card limit a person should aim for?

 

I have noticed some people with lots of cards and limits in excess of $100,000 while some around $50,000  and some in $20,000 range.

 

What  is ideal?

 

 

 

 


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Dustink
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Re: How much Credit Limit should one aim for?

10 times annual income

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CreditScholar
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Registered: ‎01-22-2012
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Re: How much Credit Limit should one aim for?


tennisfan78 wrote:

 

what are your thoughts on how much total credit card limit a person should aim for?

 

I have noticed some people with lots of cards and limits in excess of $100,000 while some around $50,000  and some in $20,000 range.

 

What  is ideal?

 

 

 

 


I'd aim for an amount that is 10x your average monthly spend. This will let you maximize your FICO by keeping your util at 9% or lower. While there will be months that are higher than normal, you'll be able to charge without worrying about util most of the time.
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Established Contributor
tennisfan78
Posts: 630
Registered: ‎09-18-2011
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Re: How much Credit Limit should one aim for?

 

Great suggestions. Thank you!


Starting Score: EQ=665,TU=618 on Oct 9,2010
EQ=702,TU=725 on Apr 11, 2012 EQ=705 on Oct 31, 2012 Current Score: EQ=702, TU=714 on Dec 8, 2012
Goal Score: 750

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Dustink
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Registered: ‎10-02-2012
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Re: How much Credit Limit should one aim for?

[ Edited ]

10x annual income will allow you to keep utilization low even if you lose your job for a year. That is a rather unrealistic target to aim for and I am kind of joking about it, but honestly. The sky is the limit as far as total limits.

 

10x your average months spend is not nearly enough. Your holiday spending is likely much higher than your basic spending during the year. So your utlization will be off. It is better to have way more than you need than to have just enough.

 

As long as you can get it to report between 1%-9% no matter what, that is the total limit you want.

 

I would say a more realistic limit would be the average of 100 times you lowest months spend and 10 times your highest months spend.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k       $8.5K          Closed          $19k      $6.5k        $24.2k        Closed         $5k       Closed     $8.5k        Closed      @2.49%
Established Contributor
tennisfan78
Posts: 630
Registered: ‎09-18-2011
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Re: How much Credit Limit should one aim for?


Dustink wrote:

10x annual income will allow you to keep utilization low even if you lose your job for a year. That is a rather unrealistic target to aim for and I am kind of joking about it, but honestly. The sky is the limit as far as total limits.

 

10x your average months spend is not nearly enough. Your holiday spending is likely much higher than your basic spending during the year. So your utlization will be off. It is better to have way more than you need than to have just enough.

 

As long as you can get it to report between 1%-9% no matter what, that is the total limit you want.

 

I would say a more realistic limit would be the average of 100 times you lowest months spend and 10 times your highest months spend.


Those are some excellent points. It makes sense to keep the avail credit at high, so the util can always be below 9% 

I have a lot of work ahead of me lol

 

 


Starting Score: EQ=665,TU=618 on Oct 9,2010
EQ=702,TU=725 on Apr 11, 2012 EQ=705 on Oct 31, 2012 Current Score: EQ=702, TU=714 on Dec 8, 2012
Goal Score: 750

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HiLine
Posts: 3,166
Registered: ‎10-19-2012
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Re: How much Credit Limit should one aim for?


Dustink wrote:

 

 

I would say a more realistic limit would be the average of 100 times you lowest months spend and 10 times your highest months spend.


I don't know how you came up with this formula, but I think it's a really good estimate.

 

My highest spend in one month has been 6k-7k, and my lowest has been around 700. And I do plan to aim for a total credit limit in the 50k-70k range, approximately my annual income. 

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toppers555
Posts: 552
Registered: ‎09-28-2012
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Re: How much Credit Limit should one aim for?


Dustink wrote:

10x annual income will allow you to keep utilization low even if you lose your job for a year. That is a rather unrealistic target to aim for and I am kind of joking about it, but honestly. The sky is the limit as far as total limits.

 

10x your average months spend is not nearly enough. Your holiday spending is likely much higher than your basic spending during the year. So your utlization will be off. It is better to have way more than you need than to have just enough.

 

As long as you can get it to report between 1%-9% no matter what, that is the total limit you want.

 

I would say a more realistic limit would be the average of 100 times you lowest months spend and 10 times your highest months spend.


10x your average months spend can be enough depending on your lifestyle. Personal I do not count myself credit card limits as backup funds. I believe in having a savings  for job lost or other unexpected events. I have about a 3 month stash , which over the next year or so hope to buld out to a year worth.  



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Valued Contributor
Dustink
Posts: 3,097
Registered: ‎10-02-2012
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Re: How much Credit Limit should one aim for?

[ Edited ]

toppers555 wrote:

Dustink wrote:

10x annual income will allow you to keep utilization low even if you lose your job for a year. That is a rather unrealistic target to aim for and I am kind of joking about it, but honestly. The sky is the limit as far as total limits.

 

10x your average months spend is not nearly enough. Your holiday spending is likely much higher than your basic spending during the year. So your utilization will be off. It is better to have way more than you need than to have just enough.

 

As long as you can get it to report between 1%-9% no matter what, that is the total limit you want.

 

I would say a more realistic limit would be the average of 100 times you lowest months spend and 10 times your highest months spend.


10x your average months spend can be enough depending on your lifestyle. Personal I do not count myself credit card limits as backup funds. I believe in having a savings  for job lost or other unexpected events. I have about a 3 month stash , which over the next year or so hope to buld out to a year worth.  


I agree, credit cards are not back up funds. I never make a purchase that I don't already have funds to cover. I have never paid interest on any credit card, and I have an emergency fund large enough to cover my expenses for 5 years.

 

I was just full of it when I said 10x annual income, although why not have limits that high? In the event of a job loss and depletion of savings, one could still keep their credit score in tack for a good period of time.

 

But my average of 100x lowest spend and 10x highest spend was actually a serious answer. That will almost always keep you between 1-9% when paying in full each month. Although, I see no reason to not have limits higher than that. Other than some months utilization will report as 0% because you will not reach the 1% mark.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k       $8.5K          Closed          $19k      $6.5k        $24.2k        Closed         $5k       Closed     $8.5k        Closed      @2.49%
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HiLine
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Re: How much Credit Limit should one aim for?

Actually if you regard credit cards as emergency funds, it's better to keep a low total limit on a regular basis, then apply for 0% offers when the adverse event happens.


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