Credit Limit To Net Income...

Anonymous · ‎06-04-2015

What is an acceptable, "rule-of-thumb" amount of credit to have that is a measure of your net income? I understand the debt-to-income measurement behind credit approvals and such, but when one applies for a credit card or personal loan or line of credit, is there a measurement that will no longer affect a person's FICO scores?

I feel like I'm being confusing, so for example, my gross yearly income is roughly $31,000.00 and get taxed about 22% consistently, so I see about $25,000 in actual disposable income. I, because of low scores and an inability to get unsecured credit extended, only have $500 total credit in revolving accounts, or 2% of my disposable income. Is there some amount that I should have in revolving accounts that is beneficial, seeing as it seems that the credit limits also have an effect as well?

Anonymous · ‎06-04-2015

@Anonymous wrote:
What is an acceptable, "rule-of-thumb" amount of credit to have that is a measure of your net income? I understand the debt-to-income measurement behind credit approvals and such, but when one applies for a credit card or personal loan or line of credit, is there a measurement that will no longer affect a person's FICO scores?

I feel like I'm being confusing, so for example, my gross yearly income is roughly $31,000.00 and get taxed about 22% consistently, so I see about $25,000 in actual disposable income. I, because of low scores and an inability to get unsecured credit extended, only have $500 total credit in revolving accounts, or 2% of my disposable income. Is there some amount that I should have in revolving accounts that is beneficial, seeing as it seems that the credit limits also have an effect as well?

Its not so much the accumulative limit of the accounts as it is the number of accounts (generally 3-4 w/ 1 being store card when rebuilding), and starting off rebuilding dont expect to get high cl's. If you are having trouble getting unsecured than look at secured to help improve credit until you qalify for unsecured. Once you get unsecured than you can increase usage of the cards to give the creditors a good reason to give you an auto CLI. Just be warned of cards posting as this will lower your score some if your UTI goes high.

Anonymous · ‎06-04-2015

@Anonymous wrote:

Its not so much the accumulative limit of the accounts as it is the number of accounts (generally 3-4 w/ 1 being store card when rebuilding), and starting off rebuilding dont expect to get high cl's. If you are having trouble getting unsecured than look at secured to help improve credit until you qalify for unsecured. Once you get unsecured than you can increase usage of the cards to give the creditors a good reason to give you an auto CLI. Just be warned of cards posting as this will lower your score some if your UTI goes high.

I understand why I don't have high CL's and all, and the 2 cards I have that have yet to post to the CRA's, but when you use the credit simulator, the CL when "applying for a credit card" seems to have some marginal effect on your scores, so I assume that the credit available to an individual matters to a degree. I ask, because some folks have limits in the six-figure area with enough cards to fill a wallet and some have it just for the revolving accounts with the bare minimum (3, as I've read). So I was just wondering, for the future, what is an acceptable total CL to have and is it based on your income, i.e. ability to pay? And if so, how much is considered reasonable?

Anonymous · ‎06-04-2015

@Anonymous wrote:
@Anonymous wrote:

Its not so much the accumulative limit of the accounts as it is the number of accounts (generally 3-4 w/ 1 being store card when rebuilding), and starting off rebuilding dont expect to get high cl's. If you are having trouble getting unsecured than look at secured to help improve credit until you qalify for unsecured. Once you get unsecured than you can increase usage of the cards to give the creditors a good reason to give you an auto CLI. Just be warned of cards posting as this will lower your score some if your UTI goes high.
I understand why I don't have high CL's and all, and the 2 cards I have that have yet to post to the CRA's, but when you use the credit simulator, the CL when "applying for a credit card" seems to have some marginal effect on your scores, so I assume that the credit available to an individual matters to a degree. I ask, because some folks have limits in the six-figure area with enough cards to fill a wallet and some have it just for the revolving accounts with the bare minimum (3, as I've read). So I was just wondering, for the future, what is an acceptable total CL to have and is it based on your income, i.e. ability to pay? And if so, how much is considered reasonable?

Available credit has very little effect on your scores unless you dont have any, or little revolving credit. I have seen a couple guys get declined for too much available credit but that seems to be at the discretion of the creditor rather than being based on the applicants credit profile.

From what i have seen an acceptable number of cards is around 4-5. This will allow you to carry 1 general purpose/accepted everywhere card, 1 low interest for carrying balances, and 2-3 reward cards dependant on your shopping habbits. Store cards = YMMV. CL's will vary for each person due to income, usage, credit history.

gdale6 · ‎06-04-2015

@Anonymous wrote:
What is an acceptable, "rule-of-thumb" amount of credit to have that is a measure of your net income? I understand the debt-to-income measurement behind credit approvals and such, but when one applies for a credit card or personal loan or line of credit, is there a measurement that will no longer affect a person's FICO scores?

I feel like I'm being confusing, so for example, my gross yearly income is roughly $31,000.00 and get taxed about 22% consistently, so I see about $25,000 in actual disposable income. I, because of low scores and an inability to get unsecured credit extended, only have $500 total credit in revolving accounts, or 2% of my disposable income. Is there some amount that I should have in revolving accounts that is beneficial, seeing as it seems that the credit limits also have an effect as well?

If you keep your utilization low and use your credit responsibly over time (steadily increasing your Fico score) you can end up with many times your income in available revolving credit, I personally am very close to 3X available credit to gross income. At minimum you would want 3 bankcards and 1 store card, there is no top maximum number of cards its what you feel comfortable with. Personally I have 22 (incl hidden TLs) there are others on this board who ave 100+ cards and conversly some who only have the minimum.

Your Fico is always going to be affected when you open new accounts since its a fluid number based on whats in your CR at the time of request for score. Utilization is scored on the aggregate of available limits and on each card individually as well as the number of accounts reporting a balance. 30% of Fico is derived from your use of revolving credit lines. If you are going for higher Fico score then you want 1 card reporting no more than 9% of its individual CL and the rest at 0.