topic Re: Too much available credit in Credit Cards

Too much available credit (updated)

red259 — Mon, 18 May 2015 20:00:55 GMT

Has anyone even been denied for having too much available credit across all lenders? Clearly people get denied for having too much available credit with the particular lender they are applying with and so I am not asking about that. What I am asking is has anyone been denied by a lender not because they had too much available credit with that particular lender but because they were told they had too much credit with other lenders?

Update: The answer to above is yes. Now the question is assuming all else is perfect in a credit report with good utilization how much would be too much in general would be too much available credit for someone with 50k in annual income (x1,x2,x3, etc). Just trying to come to a general guideline as hitting a specific number is not possible.

Re: Too much available credit

CreditCuriosity — Mon, 18 May 2015 19:29:22 GMT

Yes you read of stories about this all the time here... See CU's more so than others aka Pyramiding debt (or that is what they say). I haven't ran across this yet personally but read stories about this all the time.

Re: Too much available credit

Pway — Mon, 18 May 2015 19:27:17 GMT

Barclays told me that when I applied for their apple card

Re: Too much available credit

Anonymous — Mon, 18 May 2015 19:29:30 GMT

There was a post over the weekend about this...Yes. Though after reading it it sort of seemed that it was just a generic we arent comfortable lending to you right now but we need a reason msg.

Re: Too much available credit

TRC_WA — Mon, 18 May 2015 19:29:41 GMT

If I worked for a bank/CU and saw an app that makes $50k a year and has $200k in credit with $195k of that available... I'd most definitely deny for too much available credit.

Pretty common no?

Re: Too much available credit

Anonymous — Mon, 18 May 2015 19:33:23 GMT

@TRC_WA wrote:
If I worked for a bank/CU and saw an app that makes $50k a year and has $200k in credit with $195k of that available... I'd most definitely deny for too much available credit.

Pretty common no?

It's not just that it's available (presumably your denial would be even quicker if only $1K of the $200K was available!). With an "excessive" total CL, you would either get this or get something about too much debt.

Re: Too much available credit

Skye12329 — Mon, 18 May 2015 19:42:37 GMT

This is one of my slight fears to be denied for. But it makes sense why a bank might wanna protect themselves from your business if someone did have an excessive amount of credit. One day someone could have low utilisation and the next day due to whatever circumstances they could have a much higher utilization. Granted it won't report right away but you get the jist

Re: Too much available credit

red259 — Mon, 18 May 2015 19:46:00 GMT

In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.

Re: Too much available credit

TRC_WA — Mon, 18 May 2015 19:50:30 GMT

@red259 wrote:
In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.

I'm comfortable with roughly $65k in CL's... which equals my annual income.

$130k/$195k in CL's isn't something I need. To each their own of course...

Re: Too much available credit

red259 — Mon, 18 May 2015 19:52:11 GMT

@TRC_WA wrote:
@red259 wrote:
In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.
I'm comfortable with roughly $65k in CL's... which equals my annual income.

$130k/$195k in CL's isn't something I need. To each their own of course...

Yes, I don't think I would ever reach double my income or need that, but I am just curious where a lender may generally start gettng nervous.

Re: Too much available credit

icyhot — Mon, 18 May 2015 19:52:44 GMT

I've asked a similar question in regards to wanting to get a mortgage sometime down the line, I think it really varies by the person and there are other red flags on someone's report as well

Re: Too much available credit

DeeBee78 — Mon, 18 May 2015 19:53:19 GMT

@red259 wrote:
In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.

I would love to know this too. Right now my combined credit limits represent 22.36% of my income (55k divided by 12.3k). I was thinking a 1:1 ratio of credit to income is the maximum amount of credit I'm comfortable with.

Re: Too much available credit

TRC_WA — Mon, 18 May 2015 19:56:42 GMT

@DeeBee78 wrote:
@red259 wrote:
In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.
I would love to know this too. Right now my combined credit limits represent 22.36% of my income (55k divided by 12.3k). I was thinking a 1:1 ratio of credit to income is the maximum amount of credit I'm comfortable with.

That's where I am at present... and as said, I'm fine with it.

Re: Too much available credit

red259 — Mon, 18 May 2015 19:56:57 GMT

@icyhot wrote:
I've asked a similar question in regards to wanting to get a mortgage sometime down the line, I think it really varies by the person and there are other red flags on someone's report as well

True, but for the sake of discussion we should assume that all else is perfect, otherwise it would never lbe the same. Just looking for a general baseline.

Re: Too much available credit (updated)

B335is — Mon, 18 May 2015 20:12:05 GMT

It's an individual decision how much available credit you're comfortable with. I had no issue with a mortgage with many times my income in available credit. As mentioned CU's are usually the first ones to shy away from a lot of available credit.

Re: Too much available credit (updated)

Anonymous — Mon, 18 May 2015 21:07:33 GMT

Yes. Barclay's would not match my AMEX CL on my Ring card because of this.

Re: Too much available credit

Anonymous — Mon, 18 May 2015 21:21:10 GMT

@red259 wrote:
In light of the fact that you can be denied for too much overall credit it begs the question: At what point should you consider reducing credit lines (or at leats stop asking for CLIs) when you have an upcoming app cycle? When your credit line equals your annual income, 2x your annual income, 3x? To be clear I am referring to situations where people have lots of available credit but a decent utilization rating. For the sake of argument lets set income at a nice round number of 50k.

I expect it is more subtle than that (but can't be sure!). Given enough time, I expect I can add say a $5K card every few months, so, over time (esepcially if I can become immortal) get a total as high as I like. Now it is possible that at some point, when I add the n+1th card, my existing issuers will suddenly say "too much" but it seems unlikely. I think the rate of gaining new credit also plays into it, which is why app sprees can sometimes cause issuers.

Re: Too much available credit (updated)

Dw4250 — Mon, 18 May 2015 21:43:20 GMT

@red259 wrote:
Has anyone even been denied for having too much available credit across all lenders? Clearly people get denied for having too much available credit with the particular lender they are applying with and so I am not asking about that. What I am asking is has anyone been denied by a lender not because they had too much available credit with that particular lender but because they were told they had too much credit with other lenders?

Update: The answer to above is yes. Now the question is assuming all else is perfect in a credit report with good utilization how much would be too much in general would be too much available credit for someone with 50k in annual income (x1,x2,x3, etc). Just trying to come to a general guideline as hitting a specific number is not possible.

Interesting question. Are we talking being denied for new credit from a lender, or being denied additional credit (CLI?; LOC?) from an existing lender?

My guess is every bank has their threshold for whatever risk they feel you as an individual hold to them, and that determines how far out on the branch they are willing to go. I'm guessing once people start to get to 2x or 3x avail credit/salary, it may raise some flags. As TRC WA and others have said, common sense dictates that if you are not using most of your available credit (10% or less), you do not need more credit.

Right now, I have more available credit ($130K; 17 cards) than annual gross income ($90K) and that's right in my comfort zone.

Re: Too much available credit (updated)

happypill — Mon, 18 May 2015 21:46:38 GMT

In addition to things mentioned, I think lender algorithms probably include how much you utilize and pay off. If someone has $50k available but only charges $1k every month, as a lender I'd look at that as a lot of risk with little upside. This person doesn't look like they need $50k available, there's little money to be made off $1k in charges a month and the point they tap into the $50k limit is probably when they are getting into trouble. OTOH, if someone has $50k available, regularly charges $25k and PIF each month, that might look like a good risk to a lender. This person will generate tons of fees and might have ever increasing credit needs with a gorwing business or executive travel or whatever.

As a lender, if I see someone with large untapped lines of credit, I'd wonder why the need more and how we would make money.

Re: Too much available credit (updated)

Anonymous — Mon, 18 May 2015 21:52:16 GMT

@happypill wrote:
In addition to things mentioned, I think lender algorithms probably include how much you utilize and pay off. If someone has $50k available but only charges $1k every month, as a lender I'd look at that as a lot of risk with little upside. This person doesn't look like they need $50k available, there's little money to be made off $1k in charges a month and the point they tap into the $50k limit is probably when they are getting into trouble. OTOH, if someone has $50k available, regularly charges $25k and PIF each month, that might look like a good risk to a lender. This person will generate tons of fees and might have ever increasing credit needs with a gorwing business or executive travel or whatever.

As a lender, if I see someone with large untapped lines of credit, I'd wonder why the need more and how we would make money.

agree with all of that, but would add that it's hard for lenders to see what is happening with other lenders just by your credit report. a 0 bal on a 10k line could be sock drawered or running through 30k in purchases with 3 large payments per month.