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Low Credit Card Limits - How Much of A Problem Is That?

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Anonymous
Not applicable

Re: Low Credit Card Limits - How Much of A Problem Is That?

Borrowed from another site:

Amounts owed category is "weighted". Basically it is credit used divided by credit available. The used divided by available factor is inversely scored. Mortgages do not count here. For instance, Having $20000 of credit and carrying all $20000 will give you very low points - maybe 10 points only out of 150 possible. But carrying a balance of 0 on $20000 available will score you close to 150 points! That means that although you have high credit limits, you don;t need or use that credit - a good risk and indication of good money management. Maxing out all credit limits (ie $20,000 owing on $20,000) will give you very few points - not 0 but something like 10.
However the higher the AVAILABLE credit number will give you more points. In other words 0/$500 does not carry the same as 0/$8000. And I was told that THIS category has the most significant impact. Keeping your balances low or nil will yield you close to 150 points reagrdless of any time element involved. Fin out when credit cards post their oustanding balances (usually it is your statement date but may be different) and make sure you can get your balanace paid off by that date - and then watch your score shoot up.
Message 11 of 22
Anonymous
Not applicable

Re: Low Credit Card Limits - How Much of A Problem Is That?

STanggt03,
Do you have any idea, out of that 150 possible, what difference it makes between something like a $500 CL and a $5,000 CL?
Do you think it's only a few points or something like 50?
Message 12 of 22
Anonymous
Not applicable

Re: Low Credit Card Limits - How Much of A Problem Is That?

I have no clue. I'm sure it's ever changing.
Message 13 of 22
Anonymous
Not applicable

Re: Low Credit Card Limits - How Much of A Problem Is That?

Thanks for the info 'stang.
You have been a great source of info!
Message 14 of 22
slarano
Frequent Contributor

Re: Low Credit Card Limits - How Much of A Problem Is That?

Please note that Macy's no longer reports its CL's to the credit bureaus. Company policy states that they cannot even release your CL to you if you call them to inquire about it. Bummer considering it used to be one of my highest CL's (albeit being a store card), so now I just have it down to $0 balance and use it anytime I want to use my discount (I work for Macys).  

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Message 15 of 22
dp321
Regular Contributor

Re: Low Credit Card Limits - How Much of A Problem Is That?

While high credit limit may give your an edge, I think your best bet right now it to pay off as much debt as possible. This way you stand at much better chance of getting more credit. If you can make sure BoA does a soft pull for credit line increase, you can ask for one on the existing account while you apply for the British Airway card.


Starting Score: EQ: 703 (4/2011);
Current Score: EQ: 738 (04/2013)

Goal Score: ALL 800

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Message 16 of 22
fused
Moderator Emeritus

Re: Low Credit Card Limits - How Much of A Problem Is That?

 


@Anonymous wrote:
Higher credit limits do affect FICO scores. Someone with 0% utilization on $2000 in tradelines will not have as many points as someone with 0% utilization on $10k, for that category. I'm not sure how much the CL affects this, but that category has a max of 150 points.

Actually that is not true.Smiley Happy 0% util on $2,000 in TLs will net the same FICO points as %0 util on 10K in TLs. Same goes for any other percentage, 1% util, 5% util and etc. In FICO scoring, its all about util and balaces owed, and how many revolving TLs have any balance reporting.

Message 17 of 22
haulingthescoreup
Moderator Emerita

Re: Low Credit Card Limits - How Much of A Problem Is That?


@fused wrote:

 


@Anonymous wrote:
Higher credit limits do affect FICO scores. Someone with 0% utilization on $2000 in tradelines will not have as many points as someone with 0% utilization on $10k, for that category. I'm not sure how much the CL affects this, but that category has a max of 150 points.

Actually that is not true.Smiley Happy 0% util on $2,000 in TLs will net the same FICO points as %0 util on 10K in TLs. Same goes for any other percentage, 1% util, 5% util and etc. In FICO scoring, its all about util and balaces owed, and how many revolving TLs have any balance reporting.


+1

 

I've seen this on my own reports.

 

Where you might see a difference is on Equifax, which will hit you for high absolute balances. Even then, you have to have an awfully high balance.

 

Otherwise, util is util, regardless of the denominator (total CL.)

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 18 of 22
Anonymous
Not applicable

Re: Low Credit Card Limits - How Much of A Problem Is That?

This info came from a Fair Issaic employee, for what it's worth.
Message 19 of 22
austinguy907
Valued Contributor

Re: Low Credit Card Limits - How Much of A Problem Is That?

If you want a relatively easy higher CL then apply for a CC through a local or national CU.  They will typically approve a higher limit and lower APR than any bank before a large national bank chain will.  They work the same and report the same.  Less hassle and more rewards in the long run.

Message 20 of 22
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