topic Re: Are too many CLI's a problem in Credit Cards

Are too many CLI's a problem

ecxpa — Sat, 24 Jan 2015 17:34:05 GMT

At what point to CLI's turn negative if ever. I know new credit can possibly trigger AA but to CLI's on credit cards ever create a problem. I've seen folks get denied and I have a time or too for "too much available credit". It's hard not to push the luv button and get CLI's with SP.

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 17:43:52 GMT

I don't see how CLIs could be anything but positive. They increase your available credit, and lower your utilization, which FICO loves.

The only potential negative could be if the increase in available credit is too tempting for someone who's new to financial responsibility or new to credit?

It's like opening a rabbit hole. The rabbit hole is only dangerous if you fall into it..

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 17:45:21 GMT

im gussing when your asking in a short peroid of time to all your lenders.

and when your CL is over what you make in a year.

Re: Are too many CLI's a problem

B335is — Sat, 24 Jan 2015 17:51:47 GMT

Many people have more available credit than what they make in a year. I would imagine it depends on factors like aaoa and dti.

Re: Are too many CLI's a problem

NRB525 — Sat, 24 Jan 2015 17:52:30 GMT

With mid-700s scores, you are likely OK, however you've got a large list of cards. No one can predict when or even if some individual will get AA.

I'm a believer in taking preemptive action. I closed two cards in October that I knew were not fitting with my future plans. I've closed other cards in the past to freeze terms when the lender wanted to change them. Other cards were closed by the banks. The individual cardholder is well advised to take a close look at the CC one wants to keep, and if there are marginal or "only nice to have" cards, they need to be considered to be cut. That way, the cardholder focus, spend flow and attention is on those cards that make sense to the individual for the long term, the ones you'd rather not get closed.

Said another way, yes, I think there is a limit to CL and CLI that one can expect. It just cannot be defined until after the AA happens.

Good luck!

Re: Are too many CLI's a problem

kdm31091 — Sat, 24 Jan 2015 18:01:29 GMT

CLIs are good for utilization but it is not the only thing you need to consider. Debt to income is a factor. Even zero balance cards with huge limits can still be viewed as a risk because you in theory can go max them out whenever. The point is don't go crazy with CLIs just because. Pad your util but don't ignore other factors.

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 18:08:55 GMT

@ecxpa wrote:
At what point to CLI's turn negative if ever. I know new credit can possibly trigger AA but to CLI's on credit cards ever create a problem. I've seen folks get denied and I have a time or too for "too much available credit". It's hard not to push the luv button and get CLI's with SP.

Remember that pretty much all lenders have maximum available credit that they are willing to extend to you. If you hit that internal limit then you will not be able to get more cards if you want more (unless you recon and reallocate limits).

Also, some lenders - notably PenFed - will view a lot of available credit as a negative. They call this "credit pyramiding".

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 18:29:11 GMT

@Anonymous wrote:

The only potential negative could be if the increase in available credit is too tempting for someone who's new to financial responsibility or new to credit?

It's like opening a rabbit hole. The rabbit hole is only dangerous if you fall into it..

Not that I've ever seen a rabbit hole before but I like the analogy.

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 18:34:36 GMT

I like CLIs. It helps when you have an itchy trigger finger but don't want a HP.

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 18:43:09 GMT

HP CLIs can hurt because of the inquiries, but SP CLIs are almost always good. CLIs do have a few minor consequences that could become major under specific cirumstances.

1. Too much credit with one lender: If a lender feels they have extended the maximum credit they can to you, they might start denying all new card applications. You can usually get around this by calling in to recon and offering to move credit lines from another card to the new account. This works great with Barclays, Chase, Amex, etc, but a few lenders won't do this easily and might even do a second HP to move the credit line or even refuse to do so.

2. To much available credit: Every lender is different, but some pay more attention to this than others. Generally, till your available credit gets significantly over your yearly income, this is not too much of a problem. Moreover, many on this forum have many times their income in available credit. Simply put, some lenders care about this but others don't.

3. Tendency to overspend: Some people have less self control than others. If your limits are proportionate to your income, you are less likely to overspend. If you have 300k in limits and 50k in income, even 10% utilization across your cards is very very dangerous.

4. Overconfidence in available credit: Lenders will CLD you if your debt is high in relation to your income. People post here occasionally about AAs and CLDs when their utilization is low and their credit scores are stellar. Sometimes, the reason behind the AA is the level of their debt to income. FICO scores only look at revolving debt in comparison to available credit. For a person with low income compared to available credit, high debt might not hurt their score since their utilization is low. 30k CC debt with 300k available credit is good utilization. But if the person has 50k income the lenders might start CLDing based on the income information they have on file. Simply put, this can result in a chain of CLDs and other AAs which will put downward pressure on the persons score and cause more CLDs and AAs.

Overall, more available credit is rarely bad, but you have to look at your own situation before making the decision. I don't take every CLI I can get because I have more credit than I need and I like to apply for a lot of cards for sign-on bonuses. I don't want to get denied for too much available credit from the few issuers who might care about it.

Re: Are too many CLI's a problem

red259 — Sat, 24 Jan 2015 19:25:35 GMT

@Anonymous wrote:
I don't see how CLIs could be anything but positive. They increase your available credit, and lower your utilization, which FICO loves.

The only potential negative could be if the increase in available credit is too tempting for someone who's new to financial responsibility or new to credit?

It's like opening a rabbit hole. The rabbit hole is only dangerous if you fall into it..

Read the forumns some and you will see how too much of an increase in credit can be in some instances be negative. Lenders have taken AA against people for too much credit, far more people have been denied cards for that very reason. How much is too much credit is going to vary widely from person to person, but if you have enough credit for your needs it can be counterproductive to keep pushing for increases.

Re: Are too many CLI's a problem

Chris679 — Sat, 24 Jan 2015 19:54:47 GMT

Personally I like to get each card up to the $10000-$20000 range depending on how much I'm using it. That way you can spend away without worrying about utilization %. As always I think the people reporting denials or AA due to too much credit are not telling the whole story. That or they are the folks that are just trying for CLI that they don't need because they are trying to reach some target number of available CL.

Re: Are too many CLI's a problem

Anonymous — Sat, 24 Jan 2015 20:02:21 GMT

All the better reason for me to keep within 5-8 cards. I'd rather have that number with good quality lenders than have 20 cards with a majority of store cards or subprime cards.