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Is this right? Higher limits are bad for you?

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CS800
Super Contributor

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


@longtimelurker wrote:

@frugalQ wrote:
Just having higher limits is not bad for you. However, how you utilize those limits is what can make a bad situation.

Well, a post from today showing it can be "bad" without using them.

 

http://ficoforums.myfico.com/t5/Credit-Cards/Barclay-closed-my-account/td-p/2411411

 

Barclays closed the card because the poster had too much available credit.


We are talking barclays here, they see one too many inqs and they CLD you Smiley Happy

 

I think the % your using of your total available credit is what matters. I use 1% of my total available CL. As the FICO formula dictatates, 30% of your score is about the util.

 

Doesn't matter if you have a CL twice your annual income it's what % you use. On the other hand, it might prevent you from getting addtitional credit; that's the only drawback (if your income cant support it)

 

 




Message 21 of 24
takeshi74
Senior Contributor

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


@pinipig523 wrote:
I got into it with another poster on a different forum, does having a higher limit put your score at risk?


As always, consider the source.

 


@pinipig523 wrote:
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.

Nothing wrong with paying every day but it's not necessary.  If he wants a zero balance reported all he has to do is pay before the statement cuts since it's the balance at statement period end that gets reported.  Statement periods don't necessarily end at the end of the calender month.  The statement periods for my cards end at various days throughout the month.

 


@pinipig523 wrote:
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.

Already covered above but this person doesn't understand debt versus available credit.  This person also doesn't seem to understand how credit limits affect utilization.

Message 22 of 24
frugalQ
Valued Contributor

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

My post is in reference to OP's post.
AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 23 of 24
TheConductor
Established Contributor

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


@longtimelurker wrote:

Well, a post from today showing it can be "bad" without using them.

 

http://ficoforums.myfico.com/t5/Credit-Cards/Barclay-closed-my-account/td-p/2411411

 

Barclays closed the card because the poster had too much available credit.


I suspect they closed the card because the poster had not used the card since November 2011 AND had too much available credit.

 

That poses a greater risk to Barclays.  Suppose you have a catastrophic event and have to use all of your available credit.  Which card are you most likely to let charge off?  The favorite rewards card you use to buy groceries every week, or the sock-drawered card you never use?

 

Single-variable equations are rare in the credit world.

Starting: EQ 622 (myFICO 7/7/12), EX 696 (TU FAKO 8/14/12), TU 621 (CK TransRisk 7/24/12), Total CL $1k on 2 TLs
Current: EQ 709 (CCT 2/4/15), EX 704 (CCT 2/4/15) , TU 702 (CCT 2/4/15), Total CL $110.3k on 14 TLs Goal: 740+ x3
My Wallet: Amex BCP $30k, Chase United Explorer $16k, Amex SPG $13.5k, Barclaycard Ring MC $12.5k, Chase CSP VS $12.2k, Discover it $10.5k, C1 Venture VS $6.5k, Chase Slate $3.5k, Amex Hilton Surpass $2k, Barclaycard Apple V $2k, Chase Freedom V $1100, BoA Cash Rewards V $500, Citi BestBuy $500
My Loans: Prosper $25k/36mo, Prosper $17k/36mo
My Business: Chase Ink VS $5k, Amex BRG NPSL (> 10k),
Message 24 of 24
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