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Is this right? Higher limits are bad for you?

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pinipig523
Established Member

Is this right? Higher limits are bad for you?

I got into it with another poster on a different forum, does having a higher limit put your score at risk?

Here is his quote:

I have a rewards card and use it like cash to reep the benefits. It is a Disney card...two years ago 6 of us went to Disney for 4 days completely paid for (meals, tickets, hotel), I had to buy the plane tickets, but well worth it. We use the card for everything but pay it off each day online so at the end of the month I have a zero balance statement. I purposely keep a low limit ($3000) because there is no need to hurt my debt to income ratio just to have a higher credit limit that I dont need. A few months ago I purchased a car with my credit card and I called to raise the limit on the card while I was at the dealership. A week later the card was paid off and I lowered my limit again. I get things in the mail for ridiculous credit limits with this card and that card, but I choose to keep one card with a low limit. My wife and I have excellent credit and I dont want to be bothered by an unfavorable debt to income ratio
Message 1 of 24
23 REPLIES 23
Eightiron
Contributor

Re: Is this right? Higher limits are bad for you?

Apparently he doesnt know the difference between debt and available credit.


Gardening now for that spring harvest Entered 9/4/13 leaving 4/14
Message 2 of 24
myjourney
Super Contributor

Re: Is this right? Higher limits are bad for you?

IMHO he/she knows nothing about credit and should join MyFico ASAPSmiley Happy

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 3 of 24
sccredit
Valued Contributor

Re: Is this right? Higher limits are bad for you?

My credit limits haven't hurt my score yet lol.  It is completely inaccurate.  Now if that poster increased their line to $20k and then ran it up, THAT would hurt their score. 

Message 4 of 24
Swapmeet
Valued Contributor

Re: Is this right? Higher limits are bad for you?

Available credit has nothing to do with your debt to income ratio lmao--it is how much you owe (debt) to how much money you receive (income). Higher limits do lower your credit utilization percentage if you are carrying a balance though.... bottom line is that poster does not know what she is talking about.



My Wallet:
WalMart: ||15k|| USAA Platinum MC: ||26k|| BCE: ||9k|| Chase Freedom Siggy: ||10k|| Discover it: ||6.5k|| SG Visa: ||11k||
USAA World MC: ||23k|| US Bank Cash+ Siggy: ||7.5k|| Citi TYP World MC: ||12k|| Barclays Arrival World MC: ||13k||Citi Double Cash World MC ||25k||Sallie Mae World MC ||18.8k||Fico Scores (3 Fico Monitoring): EQ 751,TU 749, EX 743. Last app: 9-12-14 Sallie
Message 5 of 24
longtimelurker
Epic Contributor

Re: Is this right? Higher limits are bad for you?

Eventually, enough credit MIGHT prevent you getting more (as lenders feel that you just have too much available credit for your stated income) but that doesn't appear to be the concern of the person quoted in the OP.

Message 6 of 24
chrisw1968uk
Frequent Contributor

Re: Is this right? Higher limits are bad for you?

So they are saying that owing say $500 on a $1000 CL card is better than owing the same $500 on a $5000 card?? Clearly doesn't know the difference between debt and credit limit - A $5000 available credit card does not mean you have $5000 of debt - well, unless you max it out lol

Message 7 of 24
Crashem
Valued Contributor

Re: Is this right? Higher limits are bad for you?

Amount of available credit has ZERO effect on FICO.  Fico only looks at utilization.  Available credit is different than debt.  It is possible some internal formulas look at amount of total debt, but I have heard of only a couple of instances where the reason was too much available credit.

               LIMITS IN CARD DESCRIPTIONS
Message 8 of 24
Dubious
Frequent Contributor

Re: Is this right? Higher limits are bad for you?

It's pretty clear that that poster doesn't understand debt to income.

Message 9 of 24
kevinjjc
Valued Contributor

Re: Is this right? Higher limits are bad for you?

Which forum? Smiley Happy
Message 10 of 24
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