CLI's and credit score

Anonymous · ‎06-05-2007

I was just reading the AMEX thread where people were discussing getting credit limit increases. I guess people want the increases because then their utilization rating is lower, but isn't there also a danger in having too much available credit? I was given a $4400 limit by AMEX, and really don't intend on using the card for much except building the TL so I really don't see any need for an increase from them. Is there really that great of a benefit in having increased credit limits?

Tuscani · ‎06-05-2007

princessofpink wrote:
I was just reading the AMEX thread where people were discussing getting credit limit increases. I guess people want the increases because then their utilization rating is lower, but isn't there also a danger in having too much available credit? I was given a $4400 limit by AMEX, and really don't intend on using the card for much except building the TL so I really don't see any need for an increase from them. Is there really that great of a benefit in having increased credit limits?

There are some people who say too much is bad... I say BS. While a manual review could flag you for too much.. in terms of scoring the more the better!

Cory · ‎06-05-2007

What is this whole deal of getting more credit to decrease UTL, I don't get it someone please explain.

Cory

Boswd · ‎06-05-2007

Well basicall it like this If you have a credit limit of lets say $1,000 and you use your card each month to pay all your utilities bills. And the total of all your utility bills, electric, cable etc. come to $400 a month. You are using 40% of your cards utilization. So now lets say the credit card extends your limit to $2,000 now you are only utilizing 20% of your card which is much better for your scoring.

Boswd · ‎06-05-2007

Tuscani wrote:

princessofpink wrote:
I was just reading the AMEX thread where people were discussing getting credit limit increases. I guess people want the increases because then their utilization rating is lower, but isn't there also a danger in having too much available credit? I was given a $4400 limit by AMEX, and really don't intend on using the card for much except building the TL so I really don't see any need for an increase from them. Is there really that great of a benefit in having increased credit limits?

There are some people who say too much is bad... I say BS. While a manual review could flag you for too much.. in terms of scoring the more the better!

This is the only topic that I respectfully disagree with Tucsani on

. Though it may for your scoring be somewhat benefical to have tons and tons of credit cards, I think overall is very very risky, can get you into major financial difficulites, can be much harder to manage which can lead to oversites and forgotten payments, which can lead to financial disaster. And if it is a red flag to a future potential lender, that you have too many cards, it basically says to them, that you don't take credit resonsible and are one car repair, or little Timmy and Tommy both need braces, away from getting yourself into trouble. Besides isn't it the potential lenders you want to impress with a good responsible credit report, FICO isn't giving you that loan.

*Disclaimer I know not everyone who has alot of credit cards are foolish spenders and does not take their cards serious, It's just that a loan officer or a mortgage broker, might think that. *

Anonymous · ‎06-05-2007

Boswd wrote:

This is the only topic that I respectfully disagree with Tucsani on . Though it may for your scoring be somewhat benefical to have tons and tons of credit cards, I think overall is very very risky, can get you into major financial difficulites, can be much harder to manage which can lead to oversites and forgotten payments, which can lead to financial disaster. And if it is a red flag to a future potential lender, that you have too many cards, it basically says to them, that you don't take credit resonsible and are one car repair, or little Timmy and Tommy both need braces, away from getting yourself into trouble. Besides isn't it the potential lenders you want to impress with a good responsible credit report, FICO isn't giving you that loan.
*Disclaimer I know not everyone who has alot of credit cards are foolish spenders and does not take their cards serious, It's just that a loan officer or a mortgage broker, might think that. *

I think I might have to respectfully disagree with Boswd.

Too many credit cards is a different situation from high CLs. Having higher CLs does not mean you are more (or less) likely to make late payments.

Potential lenders can tell pretty quickly whether or not you have been responsible -- that's what the whole FICO thing is all about. The mere existence of a lot of cards or high limits isn't viewed in a vacuum.

The car repair and Timmy/Tommy's orthodontist bills are going to happen whether you have high credit limits or not. You're better off incurring high utilization than going over the CL.

If a lender is ever concerned that my CLs are too high, it will take one phone call to the CCC to ask them to lower it. (Hmmmmmm, wonder if that's another hard inquiry ...

)

UnderEstimated · ‎06-05-2007

I don't think too much credit hurts your score that much, but it can make you look risky in the eyes of lenders. My mother has over $48K in available credit on 4 cards. I happened to be with her at a furniture store when she was financing about $15K in furniture. She was going with their financing because it was 0% interest for 2 years and she'd have it paid for by then. The lenders they had at the store made a note that her credit risk was higher because she had $48K of credit to her disposal in the time of a hardship.

Just 2 cents for ya...

Message Edited by UnderEstimated on 06-05-2007 12:49 PM

Boswd · ‎06-05-2007

Oh no, That's what I was talking about, too many credit cards, not high limits. The higher the limit, that I agree with both you and Tuscani, it's the having too much credit cards is what I disagree with. Sorry if I didn't read the thread correctly, My Bad!!!!!!!!!

fused · ‎06-05-2007

Boswd wrote:

Tuscani wrote:

princessofpink wrote:
I was just reading the AMEX thread where people were discussing getting credit limit increases.   I guess people want the increases because then their utilization rating is lower, but isn't there also a danger in having too much available credit?   I was given a $4400 limit by AMEX, and really don't intend on using the card for much except building the TL so I really don't see any need for an increase from them. Is there really that great of a benefit in having increased credit limits?

There are some people who say too much is bad... I say BS. While a manual review could flag you for too much.. in terms of scoring the more the better!

This is the only topic that I respectfully disagree with Tucsani on .   Though it may for your scoring be somewhat benefical to have tons and tons of credit cards, I think overall is very very risky, can get you into major financial difficulites, can be much harder to manage which can lead to oversites and forgotten payments, which can lead to financial disaster.   And if it is a red flag to a future potential lender, that you have too many cards, it basically says to them, that you don't take credit resonsible and are one car repair, or little Timmy and Tommy both need braces, away from getting yourself into trouble.   Besides isn't it the potential lenders you want to impress with a good responsible credit report, FICO isn't giving you that loan.
*Disclaimer I know not everyone who has alot of credit cards are foolish spenders and does not take their cards serious,   It's just that a loan officer or a mortgage broker, might think that. *

I agree with you if someone is trying to secure a mortgage. One of the lenders I'm working with says I have too much credit available even though my record and cr's are spotless, not a single derog. They want me to close some cc's. Other than this point, bigger cl's can only help your FICO scores. Better we restart the spelling rant thread!

Boswd · ‎06-05-2007

UnderEstimated wrote:
I don't think too much credit hurts your score that much, but it can make you look risky in the eyes of lenders. My mother has over $48K in available credit on 4 cards. I happened to be with her at a furniture store when she was financing about $15K in furniture. She was going with their financing because it was 0% interest for 2 years and she'd have it paid for by then. The lenders they had at the store made a note that her credit risk was higher because she had $48K of credit to her disposal in the time of a hardship.

Just 2 cents for ya...

Message Edited by UnderEstimated on 06-05-2007 12:49 PM

the same thing happend, well almost the same thing happend to my brother and sister inlaw. She had too many credit cards and between the two of them they had something like 14 credit cards and charge cards. they had outstanding credit and scores, in the mid 700's and the bank was going to offer them a crappy interest on thier mortgage and when questioned him about it, he said way too many cards and they could qualify for the best rate if they closed some of them out. To her dismay and to my brother's delight she closed out all but 4 of her cards and they qualified for their best rate.