How much is too much?

[longtimelurker]

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@Peteyglad wrote:

Is there too much? I have yet to be declined for too much available credit. My credit limits didn't factor in to the mortgage loan last year or my car loan this year. 

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Well, as others hae stated above, people DO run into this denial reason, suggesting that there is a concept of "too much" although the amount/ratio varies from lender to lendor and with other profile factors taken into account.

IME you are likely to run into this first with a lender deciding you already have enough exposure with them, before a new bank will deny you for this.  But that may simply be the way many of acquire cards, getting a few from a particular bank rather than getting one each from say 30 lenders

[Chickenpotpie]

Each person, their personal goals are different.  I have the right amount of available credit to me at this time.  For someone else, they would need more (or less!)

If you can pay for your lifestyle, then you have the right amount of credit.  If you have to rob peter to pay paul, its time to rethink your lifestyle.

I do think that some people do get caught up in the game though and its a never ending push to get higher and higher limits and/or more and more cards.  Going that road can catch up to you after a while. 

across 4 cards I have 74K in available credit to me. It took me over 4 years to get here.

[driftless]

I understand why people acquire large numbers of cards and have high total CL's on this site, I truly do. The part that I don't understand is how do you allocate your finite spending in a way makes sense to both you and your creditors? Actually the folks who use only one card, Amex Platinum seems to have this happen a lot, makes more sense to me than rotating, SD'ing multiple cards, etc. My CL's are below my income but are high enough to do whatever I expect from the cards. Ultimately, IMHO, it boils down to the reason you have credit in the first place. Too often here it is about compensating for a period of poor or no credit.

[Anonymous]

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@Gmood1 wrote:

SDFCU declined me back in November of last year for having too much available credit. That's when I had around $125,000 in trade lines. I'm more than double that now. So there's really no way of knowing. Each creditor is different. Some will accept you with open arms, while the most conservative deny you.

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I'm hovering around 200% of my income in available revolving credit right now, and I have about 100% of my income in installment loans (student loans and my car). SDFCU let me in & prequalified me for a card. Sometimes I think there's no real rhyme or reason why certain CUs do what they do. 

[longtimelurker]

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@driftless wrote:
I understand why people acquire large numbers of cards and have high total CL's on this site, I truly do. The part that I don't understand is how do you allocate your finite spending in a way makes sense to both you and your creditors? Actually the folks who use only one card, Amex Platinum seems to have this happen a lot, makes more sense to me than rotating, SD'ing multiple cards, etc. My CL's are below my income but are high enough to do whatever I expect from the cards. Ultimately, IMHO, it boils down to the reason you have credit in the first place. Too often here it is about compensating for a period of poor or no credit.

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Using the Amex Plat for spend makes fairly little sense IMO, unless it is the only card you have (carry for the perks, not the spend).   As for allocating spending, it depends on your goals:

Some want to keep every card they have acquired, and so put small amounts of recurring spend on S/D cards, rotate the others, often with the help of spreadsheets etc.  To my mind, this is way too much work, but whatever.

Then there are others like me who have quite a few cards, but don't care if some go away.   So I use the card that maximizes my reward for a particular transaction, and if a card never gets used, that's OK.   Currently I have several cards that haven't been used for at least a year (and a few much longer)

I agree with the bolded point!

[Gmood1]

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@Anonymous wrote:

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@Gmood1 wrote:

SDFCU declined me back in November of last year for having too much available credit. That's when I had around $125,000 in trade lines. I'm more than double that now. So there's really no way of knowing. Each creditor is different. Some will accept you with open arms, while the most conservative deny you.

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I'm hovering around 200% of my income in available revolving credit right now, and I have about 100% of my income in installment loans (student loans and my car). SDFCU let me in & prequalified me for a card. Sometimes I think there's no real rhyme or reason why certain CUs do what they do. 

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Yeah, I'm thinking it's more to do with the loan officer than anything else.  

SDFCU denied me while NASA handed me a $25k CC without batting an eye during the same period of time. In fact the apps were just days apart.

Roughly 3 months ago SDFCU sent a me a preapproval for a cash loan. I promptly ripped it up and threw it in the trash.lol

[YoungB718]

The best response I've heard to date...

[iced]

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@Anonymous wrote:

I was reading another thread and something that was said made me start thinking. Speaking in terms of % of income, how much credit is too much?

I know it is not part of your FICO score, but lenders do look at more than just your number. And of course there will be many factors that affect this, but I'm just thinking in general, on average terms.

Has anyone been declined due to too much credit? Where were you when it happened?

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Ultimately, the answer to your first question is "Too much is more than you can afford to pay off."

This will vary from person to person, but my personal limits are:

CC limit: (my average monthly expendible income + the amount in my emergency savings accounts) * 3. I arrive at this number because I know it's the largest amount I can afford to pay, and then multiplied by 3 to keep me under 33% utilization in the worst case. This of course requires discipline to not cross that invisible line. I also PIF each month.

Auto: 33% of my gross annual income.

Home: 200% of my gross annual income.

For your second (and third) question, I have not been declined for too much credit, but I also don't have much credit. Doing the math from #1 above, that means my personal limit is around 40% of my gross annual income. There are many people on this forum who have total limits that are many hundreds of percent of their income and still get approved so I'm likely nowhere near that invisble boundary set by card issuers.

[longtimelurker]

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@iced wrote:

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@Anonymous wrote:

I was reading another thread and something that was said made me start thinking. Speaking in terms of % of income, how much credit is too much?

I know it is not part of your FICO score, but lenders do look at more than just your number. And of course there will be many factors that affect this, but I'm just thinking in general, on average terms.

Has anyone been declined due to too much credit? Where were you when it happened?

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Ultimately, the answer to your first question is "Too much is more than you can afford to pay off."

This will vary from person to person, but my personal limits are:

CC limit: (my average monthly expendible income + the amount in my emergency savings accounts) * 3. I arrive at this number because I know it's the largest amount I can afford to pay, and then multiplied by 3 to keep me under 33% utilization in the worst case. This of course requires discipline to not cross that invisible line. I also PIF each month.

Auto: 33% of my gross annual income.

Home: 200% of my gross annual income.

For your second (and third) question, I have not been declined for too much credit, but I also don't have much credit. Doing the math from #1 above, that means my personal limit is around 40% of my gross annual income. There are many people on this forum who have total limits that are many hundreds of percent of their income and still get approved so I'm likely nowhere near that invisble boundary set by card issuers.

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Obviously the question was asked with the meaning "how much is too much so that issuers start denying you" rather than your meaning.   But even so, if you can afford to pay off $X, having a total credit LIMIT of say 10X isn't really a problem, only if you charge more than X at one time on it.

[AverageJoesCredit]

You know you have too much when you get AA'D

Sorry, jk, or am I?