No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
It’s the same as long as you have a zero balance. The difference is when you start having a positive balance. Then higher limits are better.
@Anonymous wrote:
One guy, one card, $5000 limit. Or same guy with the same card with a $50,000 limit. Just curious if his score would be the same if he had 0% either way
Great question, Plumber. His score would be the same either way.
In fact, assuming that in both situations his CC utilization is the same (1%, 5%, etc.) his score will be the same. A 50k limit with a 3% utilization does not get you a better score than a 5k limit with a 3% utilization.
PS. If his utilization is truly 0% (meaning $0 across all cards) he will incur a scoring penalty, compared with having at least one card reporting a small balance (e.g. $5).
The problem with low limit cards is that it is much easier to reach a higher % util.
Thus, they need much closer monitoring to keep within desired util ranges.
If you charge $100 on a $300 limit card, you have a % util of 33%.
The same charge on a $3,000 limit card would only be a util of 3.3%.
Higher limit cards thus inherently provide a cushion.
@RobertEG wrote:The problem with low limit cards is that it is much easier to reach a higher % util.
Thus, they need much closer monitoring to keep within desired util ranges.
If you charge $100 on a $300 limit card, you have a % util of 33%.
The same charge on a $3,000 limit card would only be a util of 3.3%.
Higher limit cards thus inherently provide a cushion.
All true. But it's a common belief (and not an unreasonable guess) that FICO might give a scoring bonus inherently to people who have convinced CC issuers to extend them big limits. And thus people chase bigger limits thinking that in itself will help them. (The signatures of forum contributors can make people draw this inference too.)
So when the question comes up, it's worth correcting any misapprehension. It takes a person with a low credit limit more attention to keep his util low (typically two payments a cycle rather than one) but he can still spend a lot and have an ultralow CC utilization.
@RobertEG wrote:The problem with low limit cards is that it is much easier to reach a higher % util.
Thus, they need much closer monitoring to keep within desired util ranges.
If you charge $100 on a $300 limit card, you have a % util of 33%.
The same charge on a $3,000 limit card would only be a util of 3.3%.
Higher limit cards thus inherently provide a cushion.
I have around 200k of total limits. The limit on my SPG is only 1k. It reported with something like 360 dollars on it and it did not affect my credit score. I have around 1 percent total utilization.