How much is too much revolving credit?

[rodney0126]

Just curious as to how much is too much revolving credit?

I've got the following cards and CL:
cap one--1250
5/3rd ---6000
Discover more--4000
Amex Blue cash--2000
Total Merrill cash back--8400

These last 3 I got all on the same day. I understand how someone can have "too much" credit and actually hurt their credit "grade" or what ever it's called. You know, the A,B,C ect...It never occurred to me until someone was talking about it. But he was saying how banks, mortgage lenders, or who ever will sometimes look at that grade also, in addition to your score and judge you on how likely you are to be able to pay your debts if you used all your available credit. Or something like that.

So...question---say someone makes around 80k and the whole household makes about 95-100k. Would almost 22k of credit limits on credit cards be "too much" credit?

[haulingthescoreup]

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@rodney0126 wrote:
Just curious as to how much is too much revolving credit?

I've got the following cards and CL:
cap one--1250
5/3rd ---6000
Discover more--4000
Amex Blue cash--2000
Total Merrill cash back--8400

These last 3 I got all on the same day. I understand how someone can have "too much" credit and actually hurt their credit "grade" or what ever it's called. You know, the A,B,C ect...It never occurred to me until someone was talking about it. But he was saying how banks, mortgage lenders, or who ever will sometimes look at that grade also, in addition to your score and judge you on how likely you are to be able to pay your debts if you used all your available credit. Or something like that.

So...question---say someone makes around 80k and the whole household makes about 95-100k. Would almost 22k of credit limits on credit cards be "too much" credit?

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For FICO scoring purposes, there is no such thing as "too much available revolving credit", although you can certainly have "too much current debt on revolving credit." There is no FICO score penalty for high credit limits; if anything, it is apt to help your scores.

You should understand that there are other non-FICO "credit scores" that are generally referred to as "FAKO's." You get all sorts of garbage comments with them.

Lenders might get weirded out at too much credit for a mortgage or another form of credit, this is true. A mortgage lender *might* want you to have less available credit, for fear that you might run up your cards and not be able to pay your note. And some credit card issuers, for instance Juniper/Barclays, give small CL's if they think you already have enough.

That being said, $22K would certainly not be regarded as "too much" by any issuer I can imagine. I hope that you don't think that you should start reducing limits or something. If you're worried about temptation, put a small recurring bill on each card except one and lock them away. Use the remaining one to buy gas; that's bad enough. In other words, don't use credit for anything that you can't pay cash for instead.

I currently have around $92K in total credit limits on CC's and a $50K HELOC (home equity line of credit), and all my creditors seem perfectly happy. Other than Barclays, which is headed toward the shredder. But then, I also have almost no debt, other than the home remodeling expenses and some tuition expenses on the HELOC. That seems to reassure them that I'm not preparing to go off on a toot.

Message Edited by haulingthescoreup on 09-13-2008 02:11 PM

[Anonymous]

Nice new cards-

Just pay in full every month and carry no balances-

Limit the number of accounts that report a balance-

A little over 20K in new credit- time to stop and garden.

[Anonymous]

for me 500k will be my limit. about 1 year ago i had roughly 20k of sub-prime junk, my recent addition of discover just bumped me to over 91k on a 96k hhi. i think only 3 of my original accounts are still open and 1 of those will only see activity to keep it active or unless it really hits the fan.

i don't recomend anybody to try and ramp up the way i have. i have seen aa from amex (4k chopped to 500) and have been turned down by a couple of issuers for too much available credit.

i did cool it for 6 months and was able to get discover who turned me down hard exactly 1 year ago last month.

right now the plan is to work what i have and app amex plat in january. once those hit the reports it will be ameriprise and nfcu. 6 months after that penfed and delta ccu visa. if all those are obtained i'll kill 1 maybe 2 of my original accounts from the pre-myfico days.

so to answer your question, it realy just depends on what you overall goal is.

[rodney0126]

Reason why I'm asking is because I plan to get a home in the first quarter of 2011. Goal is to have a good score and grade. Right now...EQ--690, EX--703 and TU 682, these are the fico's as of 9/2008 before I got the last 3 cards. I'm shooting for 720-750 so I can get a good rate on the loan.

I've got a brand new car and a 401K loan that will be paid off by april 2010 after that...no bills to speak of and then I'll save for about a year. Should have about 50k-55k to put down on the house.

I just got the cards to help my score, until someone reminded me of the credit grade, which I've heard mortgage lenders would probably look at also.

Message Edited by rodney0126 on 09-14-2008 05:06 AM

[haulingthescoreup]

Keep hanging around here and reading and learning, and you should be fine.

And I'd be wary of talk about an A-F "credit grade." Doesn't that come with one of the FAKO systems? --Vantage scores, maybe. They've all started to blur. FICO's are what mortgage lenders will be looking at, although the Vantage people are desperately trying to get lenders to use them as well. When people start talking about your FICO's, they're probably a bit better plugged into things. It wouldn't hurt to start checking out mortgage brokers, even this early, and see what they recommend as a perfect scenario.

4 or 5 cards, all with good healthy limits and perfect histories, plus some installment loans, paid off and also with perfect history, will tell a lender that others trust you, and that you have shown that you deserved that trust. That, and a fistful of money, should do you fine.

And by the way, if you don't know about the differences between paying your CC bills before the statement drops versus after, do some reading around here. When you want to do your fine-tuning of scores, paying early can really help scores, if you normally wait until after the statement.

[Anonymous]

No, these are some good cards you have right now - just use only 1 or 2 and PIF each month, allowing a small balance to report. request CLI's at 6 month marks, etc., I think you'll be good to go.

my ideal amount of revolving credit is where you have just enough so you don't have to worry about PIF before the statement cuts because your regular month to month usage is too high.

[TangMeister]

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@Anonymous wrote:
No, these are some good cards you have right now - just use only 1 or 2 and PIF each month, allowing a small balance to report. request CLI's at 6 month marks, etc., I think you'll be good to go.

my ideal amount of revolving credit is where you have just enough so you don't have to worry about PIF before the statement cuts because your regular month to month usage is too high.

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+1 You're good to go, Rodney. Keep reading on the big credit boards such as this one, and you'll soon see you're fine and will be fine even if your CLs go to 3x or 4x what you have now. It's all about managing them and keeping them paid with perfect credit history on them over the next few years, as the other posters mention above. You're on the right track. Good luck!

Message Edited by TangMeister on 09-14-2008 11:23 AM

[Anonymous]

A-F credit grades are actually sometimes based on FICO scores. It is just a way of giving a letter to categories we on this board know as excellent, very good, good, fair, poor, etc. Prosper does use a FAKO with a similar scoring spread:

AA 760+

A 720-759

B 680-719

C 640-679

D 600-639

E 560-599

HR 520-559