Are there any magic numbers in credit limits?

[Anonymous]

Wondering if different credit limits for an individual account, or overall total limit, has any impact on underwriting or on score.

Back when I had under six months of credit history, before I could get a FICO, the FAKO from Amex used to tell me one thing helping my score was "you have built a strong relationship with lenders" which I took to mean I had some high limit cards (I was able to get two based on my Canadian credit, at that time $8000 on an Amex and $11000 on my RBC visa).

Since then I have always wondered whether there are magic numbers in credit limits from a scoring or underwriting perspective.

I hear "high limit" described differently but a common number I hear is a limit over $5000. I hear that over $25000 on an Amex and you may be asked to verify income.

And are there any overall magic numbers? Do you wind up in a different bucket if your overall limit is $50k or $100k?

I know it impacts utilization but is there any other impact? What about fit human underwriting, any common practices there?

Thoughts?

[Anonymous]

There are a few "magic numbers" as far as getting credit cards goes, but not so much when it comes to FICO scoring directly

Commonly cited wisdom around here is that once one of your cards breaches $10,000, it will be much easier to get high limits on other cards. True or not, companies will often look at your highest limit in determining what limit to give you. This is important when it comes to cards with a minimum limit. For example, the Capital One Quicksilver has a minimum limit of $3,000 (per the terms disclosure); if you don't have a card with a $3,000 limit yet, it is presumably more difficult to get the Quicksilver at all.

Additionally, some creditors will consider your total credit availability versus your income, or your total credit available from them. This is especially true with mortgage lending. If your income's not that great, a bank will probably be worried if you could rack up $50,000 in credit card debt at any time in addition to your mortgage. If you've got a $30,000 limit on one card, then you might not get a high limit on a second card with the same issuer since it would be quite a lot of exposure for them. So at some point, very high limits will actually start to hurt you.

As far as I'm aware none of these factors are actually reflected in FICO scoring.

[takeshi74]

We're not underwriters so we really can't say for certain and creditors can and do vary with their underwriting criteria so there can't be a universal "magic number" or numbers.  I don't think specific limits really matter that as much as overall credit exposure versus a given credit profile but that's just a guess.

I have $30K card and a number of cards well into 5 digit limits but that doesn't mean that every new card since getting those have been granted high limits.  The last several cards I've received have all started with $5K limits.  They're grown since then but there were certainly concerns over recent activity that led to the (relatively, for me) small initial limits.

[Thomas_Thumb]

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@Anonymous wrote:

Wondering if different credit limits for an individual account, or overall total limit, has any impact on underwriting or on score.

Back when I had under six months of credit history, before I could get a FICO, the FAKO from Amex used to tell me one thing helping my score was "you have built a strong relationship with lenders" which I took to mean I had some high limit cards (I was able to get two based on my Canadian credit, at that time $8000 on an Amex and $11000 on my RBC visa).

Since then I have always wondered whether there are magic numbers in credit limits from a scoring or underwriting perspective.

I hear "high limit" described differently but a common number I hear is a limit over $5000. I hear that over $25000 on an Amex and you may be asked to verify income.

And are there any overall magic numbers? Do you wind up in a different bucket if your overall limit is $50k or $100k?

I know it impacts utilization but is there any other impact? What about fit human underwriting, any common practices there?

Thoughts?

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I am not aware of any "magic numbers" for score based solely on credit limit $$$. Fico model scores focus on % of credit utilized.

On a side note, see below table for some info on CL relating to income and Fico score. Premium cards generally start at $10k or $15k level.

https://blog.creditkarma.com/credit-cards/how-a-credit-card-limit-is-determined/

[Themanwhocan]

When you get denied for credit, the companies have to provide a couple of standard reasons why your FICO score isn't higher. NOTE, not reasons why you were denied credit, but reasons why your score wasn't higher (people get confused about that).

One of the standard reasons, from a Transunion FICO score, is: "There are not enough premium bankcard accounts on your credit report". To which people also get confused, because they think they know a prime credit card from a sub-prime credit card, yadda yadda... when in reality they don't have a clue.

A premium Bankcard account, is a bankcard account (so, it is a Card from a Bank, maybe from a credit union too but we don't know 100% for sure...). AND the premium part MEANT that the credit limit was $10,000 or more. However, if I recall correctly it meant $10,000+ back around 1998 or so. So it might mean more than $10K today, but we don't really know.

So to answer you question, YES, there is a magic number when it comes to credit card limits. If you don't have "enough" bankcards with $10K+ limits (or maybe more) then you might not be getting as good a FICO score than if you had some or more, of those. This being FICO scoring, getting details on the formula is very difficult, and once you do learn a bit, you generally can't know when or if the formula has changed. Still, if it was a factor back then, it probably still is now.

[iv]

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@Themanwhocan wrote:

When you get denied for credit, the companies have to provide a couple of standard reasons why your FICO score isn't higher. NOTE, not reasons why you were denied credit, but reasons why your score wasn't higher (people get confused about that).

One of the standard reasons, from a Transunion FICO score, is: "There are not enough premium bankcard accounts on your credit report". To which people also get confused, because they think they know a prime credit card from a sub-prime credit card, yadda yadda... when in reality they don't have a clue.

A premium Bankcard account, is a bankcard account (so, it is a Card from a Bank, maybe from a credit union too but we don't know 100% for sure...). AND the premium part MEANT that the credit limit was $10,000 or more. However, if I recall correctly it meant $10,000+ back around 1998 or so. So it might mean more than $10K today, but we don't really know.

So to answer you question, YES, there is a magic number when it comes to credit card limits. If you don't have "enough" bankcards with $10K+ limits (or maybe more) then you might not be getting as good a FICO score than if you had some or more, of those. This being FICO scoring, getting details on the formula is very difficult, and once you do learn a bit, you generally can't know when or if the formula has changed. Still, if it was a factor back then, it probably still is now.

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Trans Union vs FTC clearly showed "Premium Bank Card" at $10k or up was a selector for prescreening (or, in that case, non-credit target marketing), along with selectors like "Upscale Retail Card" and "Finance Tradeline".

But I don't recall seeing any documentation (other than the reason code list) showing that "Premium Bank Card" was actually a score component in any particular FICO version...

[Themanwhocan]

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@iv wrote:

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@Themanwhocan wrote:

When you get denied for credit, the companies have to provide a couple of standard reasons why your FICO score isn't higher. NOTE, not reasons why you were denied credit, but reasons why your score wasn't higher (people get confused about that).

One of the standard reasons, from a Transunion FICO score, is: "There are not enough premium bankcard accounts on your credit report". To which people also get confused, because they think they know a prime credit card from a sub-prime credit card, yadda yadda... when in reality they don't have a clue.

A premium Bankcard account, is a bankcard account (so, it is a Card from a Bank, maybe from a credit union too but we don't know 100% for sure...). AND the premium part MEANT that the credit limit was $10,000 or more. However, if I recall correctly it meant $10,000+ back around 1998 or so. So it might mean more than $10K today, but we don't really know.

So to answer you question, YES, there is a magic number when it comes to credit card limits. If you don't have "enough" bankcards with $10K+ limits (or maybe more) then you might not be getting as good a FICO score than if you had some or more, of those. This being FICO scoring, getting details on the formula is very difficult, and once you do learn a bit, you generally can't know when or if the formula has changed. Still, if it was a factor back then, it probably still is now.

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Trans Union vs FTC clearly showed "Premium Bank Card" at $10k or up was a selector for prescreening (or, in that case, non-credit target marketing), along with selectors like "Upscale Retail Card" and "Finance Tradeline".

But I don't recall seeing any documentation (other than the reason code list) showing that "Premium Bank Card" was actually a score component in any particular FICO version...

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But, that is what the reason code list is. A list of reasons why your FICO score isn't as high as it otherwise could be.

Of course, there are plenty of examples of people who have received that reason code as one of their top reasons.

Remember: to use magic, all you have to do is believe in magic!