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LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

New Member

LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

I have a low debt to credit ratio, 5% but I have $100,200 of available credit (15 open credit cards). I have had credit for almost 20 years and have a good score (mortgage loan in good standing, no default accounts or recent late payments). I still was declined for an AMEX card "too many accounts open" and "too much available credit." Is it better to cancel the credit cards or lower the available balance?
Message 1 of 8
7 REPLIES
Moderator Emerita

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?


nikoisms wrote:
I have a low debt to credit ratio, 5% but I have $100,200 of available credit (15 open credit cards). I have had credit for almost 20 years and have a good score (mortgage loan in good standing, no default accounts or recent late payments). I still was declined for an AMEX card "too many accounts open" and "too much available credit." Is it better to cancel the credit cards or lower the available balance?

It's better not to apply to AmEx in this day and age, until they figure out what it is that they want out of customers.

I'd never go with a company that implied that I should reduce my available credit. There are too many other fish in the sea!
* 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 2 of 8
New Member

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

Regardless of AMEX's decision, is the number of availabe credit or number of credit card's affect my  FICO score or credit viability?

Message 3 of 8
Moderator Emerita

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

There are two different issues here. The FICO scoring formulas do not equal lenders' guidelines.

For FICO scoring:
There is no such thing as "too much credit" (too high of a total credit limit) for FICO scoring. Since your total credit limit is the denominator of the utilization equation (total amount owed divided by total credit limit = util), the higher the denominator, the better.

You can get a flag on the score report for "too many accounts", both open and closed. This appears when you have somewhere around 30 accounts reporting. Again, it could be only 5 of the 30+ that are open. As best as we can tell, there is no appreciable score damage from this.

You can definitely lose points for "too many accounts with balances". This means the number of accounts, both revolving and loan, that report a balance each month. For CC's, most lenders report the balance due on your statement. So even if you immediately pay that balance in full, it's too late for that month; it's already been sent to the bureaus. Many of us work around this by paying off all but one or two CC balances in full before the statement comes out. This way, they all report $0, except for the one or two we let report. This results in both lower util and in fewer accounts with balances.

For lenders' decision-making:
Lenders vary in what they want to see. Barclay/Juniper often gives higher CL's to those without a lot of existing credit, and lower CL's to those who have plenty already, and I suppose therefore might not be expected to use the card much. Looks like AmEx might feel the same way.

Same who-knows for the "too many accounts" thing.

Also, you should be aware that AmEx often sends baffling and illogical explanations for application declines and other adverse actions, despite however well-grounded their actual decisions might be. (A little proactive message modification, there.)
* 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 4 of 8
Senior Contributor

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

You can try to go with a bank or third party issued AMEX such as USAA, BoA, etc.

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Message 5 of 8
New Member

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

with amex gold, you can wait for layovers in the VIP lounge at the airports Smiley Wink

Message 6 of 8
Moderator Emerita

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?

You were applying for a Gold, and they declined you?? A charge card???

Good Lord, the world as we know it has come to an end...

Do you still have the letter with the reasons for the decline? If so, can you post them here, word-for-word?

I don't know if it would be any good, but you could try calling back and explaining that you plan to use the card for air travel. Travel and entertainment are the traditional areas of focus for AmEx. Maybe that would help, if they realize that they're going to get some significant activity on it.

To help explain my astonishment, I had a Gold card and loved it. Never any fuss, and as best as I could tell, toward the end it had a pretty high internal charge limit. I only canceled, and got a Blue, because I was too cheap to pay the fee. And my credit profile is nowhere near as good as yours, and I had 9 open cards when I applied, a util of under 1%, and total credit on cards alone of somewhere in the low $100'sK. They must be seriously hurting for available cash, but a charge card...

Maybe now that they dodged the bullet on the bank stress test, they'll be more willing to listen to reason.

Wow!

But still, I would never, ever close a card or ask that its limits be reduced to please a different lender. And remember again that the reasons that AmEx provides to consumers don't necessarily have anything to do with the real reasons.
* 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 7 of 8
Senior Contributor

Re: LOW revolving debt to credit ratio, HIGH credit limit - Do I cancel or lower avail balance?


nikoisms wrote:

with amex gold, you can wait for layovers in the VIP lounge at the airports Smiley Wink


 

Nope, not with Amex Gold, only with Amex Platinum, I have AMEX Gold and they keep trying to get me to move to Platinum but I don't fly enough to justify the additional annual fee.  If my job involved lots more travel, which I am glad it does not, then Platinum might be worth the fee.

 

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 8 of 8