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How much Credit Limit should one aim for?

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Re: How much Credit Limit should one aim for?

And in terms for "verification of income," this is actually required now of credit cards.  But the credit reporting agencies created a way to do it based off of the credit report: http://www.dailyfinance.com/2010/02/07/lenders-plan-to-guess-your-income-from-credit-report/

Established Contributor

Re: How much Credit Limit should one aim for?


rawraw wrote:

Hey guys!

 

I'm a long time lurker.  I'm 24 years old and this thread prompted me to sign up.  I currently have roughly a year's worth of income in available credit.  It just seems for some reason, every card I apply for lately I get what I consider a huge limit  for what my age.  For example, I got the US Bank Cash + and was given a $13,000 limit.  I have a high credit score, mortgage, never carry balances, blah blah blah.  Most of my expenses are reimbursed business expenses for travel, as I'm fairly frugal otherwise.  But sometimes I worry that I may end up with too much credit.  Then if I went crazy one day, I could suddenly have $70,000 in credit card debt in a very short time period.  

 

Does anyone think this is a valid concern? And if so, how do you handle it?


Congrats, you are doing great at such a young age.

 

To me, it is great to have a lot of credit available, but actual funds in my bank is what defines my spending habits.  I always think of credit cards as nice to have, but not going to depend on them. 

 

On the other hand, I dont have a much credit available right now. May be  folks who have a lot of credit here can give better advice.

 

 

 

 

 

 


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Valued Contributor

Re: How much Credit Limit should one aim for?


tennisfan78 wrote:

rawraw wrote:

Hey guys!

 

I'm a long time lurker.  I'm 24 years old and this thread prompted me to sign up.  I currently have roughly a year's worth of income in available credit.  It just seems for some reason, every card I apply for lately I get what I consider a huge limit  for what my age.  For example, I got the US Bank Cash + and was given a $13,000 limit.  I have a high credit score, mortgage, never carry balances, blah blah blah.  Most of my expenses are reimbursed business expenses for travel, as I'm fairly frugal otherwise.  But sometimes I worry that I may end up with too much credit.  Then if I went crazy one day, I could suddenly have $70,000 in credit card debt in a very short time period.  

 

Does anyone think this is a valid concern? And if so, how do you handle it?


Congrats, you are doing great at such a young age.

 

To me, it is great to have a lot of credit available, but actual funds in my bank is what defines my spending habits.  I always think of credit cards as nice to have, but not going to depend on them. 

 

On the other hand, I dont have a much credit available right now. May be  folks who have a lot of credit here can give better advice.

 

 

 

 

 

 


Well, only you can predict how likely it is that you will give into temptation!     But against that, a lot of credit does give you a cushion in dire circumstances (you should try to find cheaper alternatives first of course, but sometimes you can't).

 

I think the major problem with too much credit is that some potential lenders may look negatively (a recently reopened thread shows PenFed saying this) as it is potential debt.   (FICO score isn't impacted by too much credit, the more the better at lowering utilization, but more careful lenders look beyond FICO).

 

If you think it is a serious potential issue, you can of course close some of your credit lines, closing higher APRs first to minimize cost if you do go crazy.   But if you have got this far, you are probably OK!

Blogger

Re: How much Credit Limit should one aim for?


rawraw wrote:

Hey guys!

 

I'm a long time lurker.  I'm 24 years old and this thread prompted me to sign up.  I currently have roughly a year's worth of income in available credit.  It just seems for some reason, every card I apply for lately I get what I consider a huge limit  for what my age.  For example, I got the US Bank Cash + and was given a $13,000 limit.  I have a high credit score, mortgage, never carry balances, blah blah blah.  Most of my expenses are reimbursed business expenses for travel, as I'm fairly frugal otherwise.  But sometimes I worry that I may end up with too much credit.  Then if I went crazy one day, I could suddenly have $70,000 in credit card debt in a very short time period.  

 

Does anyone think this is a valid concern? And if so, how do you handle it?


I personall wouldn't have a problem with that. Since you're making 70k a year, you must be smart enough to not mishandle credit. Having 70k in available credit is similar to having 70k in your checking account in terms of impact on your spending behavior. Of course if you one day had a spell cast on you by an ex that induces you to spend all the money you have available, well, there's nothing you can do in that scenario, and if you're in that situation there may be bigger problems than just overdrawing your financial resources. 

Valued Contributor

Re: How much Credit Limit should one aim for?


HiLine wrote:

rawraw wrote:

Hey guys!

 

I'm a long time lurker.  I'm 24 years old and this thread prompted me to sign up.  I currently have roughly a year's worth of income in available credit.  It just seems for some reason, every card I apply for lately I get what I consider a huge limit  for what my age.  For example, I got the US Bank Cash + and was given a $13,000 limit.  I have a high credit score, mortgage, never carry balances, blah blah blah.  Most of my expenses are reimbursed business expenses for travel, as I'm fairly frugal otherwise.  But sometimes I worry that I may end up with too much credit.  Then if I went crazy one day, I could suddenly have $70,000 in credit card debt in a very short time period.  

 

Does anyone think this is a valid concern? And if so, how do you handle it?


I personall wouldn't have a problem with that. Since you're making 70k a year, you must be smart enough to not mishandle credit. Having 70k in available credit is similar to having 70k in your checking account in terms of impact on your spending behavior. Of course if you one day had a spell cast on you by an ex that induces you to spend all the money you have available, well, there's nothing you can do in that scenario, and if you're in that situation there may be bigger problems than just overdrawing your financial resources. 


This is no direct stab at the poster, since s/he does actually seem like a very intelligent person, but I have found in my travels that income level has zero correlation to intelligence. 

 

Some of the dumbest people I have met make $70k+ a year. 


In My Wallet: Amex BCP (12/12) $50,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Prestige (4/16) $30,000

Last App: June 27, 2015
Blogger

Re: How much Credit Limit should one aim for?


SnackTrader wrote:

HiLine wrote:

rawraw wrote:

Hey guys!

 

I'm a long time lurker.  I'm 24 years old and this thread prompted me to sign up.  I currently have roughly a year's worth of income in available credit.  It just seems for some reason, every card I apply for lately I get what I consider a huge limit  for what my age.  For example, I got the US Bank Cash + and was given a $13,000 limit.  I have a high credit score, mortgage, never carry balances, blah blah blah.  Most of my expenses are reimbursed business expenses for travel, as I'm fairly frugal otherwise.  But sometimes I worry that I may end up with too much credit.  Then if I went crazy one day, I could suddenly have $70,000 in credit card debt in a very short time period.  

 

Does anyone think this is a valid concern? And if so, how do you handle it?


I personall wouldn't have a problem with that. Since you're making 70k a year, you must be smart enough to not mishandle credit. Having 70k in available credit is similar to having 70k in your checking account in terms of impact on your spending behavior. Of course if you one day had a spell cast on you by an ex that induces you to spend all the money you have available, well, there's nothing you can do in that scenario, and if you're in that situation there may be bigger problems than just overdrawing your financial resources. 


This is no direct stab at the poster, since s/he does actually seem like a very intelligent person, but I have found in my travels that income level has zero correlation to intelligence. 

 

Some of the dumbest people I have met make $70k+ a year. 


Even 24-year-olds? 

Valued Contributor

Re: How much Credit Limit should one aim for?

Every 24 year old at my job makes $70k+ and let me tell you - they aren't total idiots, but plenty of them live on their credit cards - and some happen to be painful to work with. 

 

And for the record, I am also one of those 24 year olds. 

 

I understand the original intention of your post, and I think there's good validity to the point that a person making a solid income has the ability to pay back a significant amount of debt. However, I have seen plenty of situations where high income earners go bankrupt, and also plenty of situations where intelligent people go bankrupt. I guess what I'm saying is that just because you're earning a good income doesn't mean your bank should give you all the credit in the world. There should be a limit, and there are smarter people then I working on figuring out how much that is. 


In My Wallet: Amex BCP (12/12) $50,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Prestige (4/16) $30,000

Last App: June 27, 2015