Reply
Valued Member
prowen
Posts: 39
Registered: ‎10-15-2007

What is the Optimum CL for balancing FICO and Credit Reviews?

In reading at this site and sampling others, in is apparent that one of the critical measurements of FICO is utilization. My question regarding CLs is "how much is enough?".  Age of accounts and quality of the various TLs certainly plays in the equation, but there is almost an attitude of more is better when it comes to CLs. I know a lot of the emphasis is on rebuilding credit for people that are starting out, starting over and building back up (at various points in my life I have been in all three modes). I understand the motivation with increasing CLs for them. If you are a PIF person with less than 10% util, should you stop pushing the envelope?
 
I look at my own credit report and I have over $200K CL not including any mortgage or Heloc activity. I calculate that I could eliminate $50K in AU accounts, medical credit lines and low CL cards that I use rarely because of the "real" available credit (due to the 10% ceiling). There is no danger of me going on a binge, but a manual review would show I could sink myself if I got stupid(er). I am wondering if I should clean it up while still keeping an eye on age/average age.
 
Anybody have any wags or rules of thumb for a target? I realize this is a subjective question, but I  am curious.
Senior Contributor
imducky
Posts: 3,432
Registered: ‎08-27-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

i'm at close to 50k now (up from about 15k since i started getting serious/educated about 3 months ago). i'll stop when i hit 500k.
Valued Member
prowen
Posts: 39
Registered: ‎10-15-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

Ducky wrote:
 
i'm at close to 50k now (up from about 15k since i started getting serious/educated about 3 months ago). i'll stop when i hit 500k.

---------------------------------------------------------------------------------------------------------------------------------
 
 
I do admire a person who knows what they want!wink smiley
Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

Are we talking AmEx F/R's, or just general common sense here?

I know that I have read that some mortgage lenders will ask borrowers to close some accounts if they feel that there is too much unsecured credit floating around. The advised tactic seems to be to call a more flexible CCC, if there are any, and tell them that you need to temporarily close your card, and will they let you re-open it without lost history once the mortgage closes. (Don't know how often that has worked, lol.)

I have also read that some CCC's see no point in increasing CL on their card if they feel that you have so much unused credit on other cards that there's little or no chance of you doing serious charging on their own card.

And then finally, I've seen something about total credit not exceeding gross income. Are we talking individual income here, or HHI? If HHI, that would mean that a couple could each have their own total CL of the joint HHI, which would be weird. Is there anything to this guideline?

I love having my one high-CL card, because I know that I can clean out the appliance department at remodel time in one swell foop, as long as I remember to give USAA a heads-up this time. But with other cards, I think I would worry that suddenly using the allotted credit would freak out the CCC, resulting in a sudden CLD.
* 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
Super Contributor
marty56
Posts: 5,679
Registered: ‎10-06-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

Many years ago (pre FICO)? there was a news story about a guy who had over 1,000,000 in credit cards.
 
I would think 20% of your monthly take home pay would be the max a credit card company would reasonably allow.  I think that is the rate for a mortgage which is a secured loan.
 
Also I wouldnt get an unscured loan that was more then 36 months.
09/12/2013 FICO: EQ: 772 EX:813 TU:752
Established Contributor
jackg
Posts: 554
Registered: ‎04-26-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

prowen,
 
You have raised an issue that had me dumbfounded a few months ago, then out of nowhere it hit between the 2 eyes GOD gave me. People ask for CLI"s for 1 main reason, in my opinion: UTILIZATION. The problems it solves are: cash (f)low & high utilization.
 
I think it's really obvious at this time of the year, due to Christmas shopping. Mom/DAD are out trying to buy a merry Christmas for the family and they don't have the cash and they don't want to harm their credit situation, so the most readily available solution is a CLI to current revolving acct"s. VS: new credit acct's., it takes to long and they may not qualify.
 
It's just my opinion.
 
Myself, I have $30K revolving and a $10K LOC with <3% utilization and it's all I'll ever need but it all depends on what you, individually, are comfortable with.
 
Good Luck to ya'
4/10/14
EX=727
EQ=717
TU=718
Super Contributor
MidnightVoice
Posts: 8,158
Registered: ‎03-25-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?



marty56 wrote:
 
I would think 20% of your monthly take home pay would be the max a credit card company would reasonably allow. 
 

I have CLs that are higher than my monthly take home pay - come to think of it, all my CLs are higher than my take home pay.  But I do put 20% of it into an IRA every month.
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Valued Member
prowen
Posts: 39
Registered: ‎10-15-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

I guess in the final analysis, there may not be one "right" answer. The answer will be different according to each person's comfort level and situation. Insufficient available credit will lower your score and  a CL  beyond a certain point is not helping anything if you maintain single digit util all the time. That second number could be different for all of us. My concern was also about a TL doing a soft pull to check where you are overall. If it sees you have a million $ CL, is the reaction to start doing CLDs to protect their interests? We know if we leave an account dormant they very well could cancel the TL. We also know that the TLs are watching activity on other TLs to rate jack or do other heinous things to a consumer in the name of "helping" the customer manage debt (recent Congressional Hearings being referred to here).
 
There are a handful of TLs that I would not want to be messed with if at all possible. For me, I think I would rather sacrifice the accounts that have little value other than increasing overall CLs and try to manage the others as best I can.
 
I do sincerely appreciate the comments of all. I value the opinions of the folks that participate in this forum. I sat in the peanut gallery for eight months and lurked and it is great to get feedback on specific issues.  
Moderator Emeritus
masdeocho
Posts: 2,050
Registered: ‎04-17-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?



prowen wrote:
 
I do sincerely appreciate the comments of all. I value the opinions of the folks that participate in this forum. I sat in the peanut gallery for eight months and lurked and it is great to get feedback on specific issues.  


Welcome! Too bad you waited so long to jump in the pool! :smileyhappy:
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Super Contributor
MidnightVoice
Posts: 8,158
Registered: ‎03-25-2007

Re: What is the Optimum CL for balancing FICO and Credit Reviews?

I like high CLs on a few cards.  I have 4  ccs with different functions, and I want them all the CLs as high as possible so that if I spend a lot not only will my overall outil be low, but so will the card I spend it on.
 
I couldn't imagine me maxing out all my cards!
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+