topic Re: Importance of Credit Lines in Credit Cards

Importance of Credit Lines

Goal810 — Tue, 10 Apr 2012 00:50:02 GMT

What is the importance of credit lines? If it is for utilization I don't get it, because regardless of what the credit line is, one just has to pay off the right amount before the CC company reports to the credit bureaus and any utilization % can be achieved. Is there another reason to try to get a high CL?

I've noticed a lot of the top FICO scorers have high credit lines, looking LONG-TERM, assuming there is another reason to get high CLs, should I aim to get certain kinds of CCs in order to achieve this? Right now I have the following cards:

Bank of America

Capital One

Discover Card

Associated Bank

Thanks!

Re: Importance of Credit Lines

LS2982 — Tue, 10 Apr 2012 00:52:52 GMT

@Goal810 wrote:
What is the importance of credit lines? If it is for utilization I don't get it, because regardless of what the credit line is, one just has to pay off the right amount before the CC company reports to the credit bureaus and any utilization % can be achieved. Is there another reason to try to get a high CL?

I've noticed a lot of the top FICO scorers have high credit lines, looking LONG-TERM, assuming there is another reason to get high CLs, should I aim to get certain kinds of CCs in order to achieve this? Right now I have the following cards:

Bank of America
Capital One
Discover Card
Associated Bank

Thanks!

Best way to get higher CL's is manage your current accounts properly and not app for a bunch pf credit, also request CLI's every 6 months (hopefully SP's). Banks usually do not like to be the 1st one to give you a high CL so its going to be hard at 1st but once you have 1 bank in with you the rest should follow over time.

Re: Importance of Credit Lines

MarineVietVet — Tue, 10 Apr 2012 01:03:53 GMT

@Goal810 wrote:
What is the importance of credit lines? If it is for utilization I don't get it, because regardless of what the credit line is, one just has to pay off the right amount before the CC company reports to the credit bureaus and any utilization % can be achieved. Is there another reason to try to get a high CL?

I've noticed a lot of the top FICO scorers have high credit lines, looking LONG-TERM, assuming there is another reason to get high CLs, should I aim to get certain kinds of CCs in order to achieve this? Right now I have the following cards:

Bank of America
Capital One
Discover Card
Associated Bank

Thanks!

One reason I do it is to have a "buffer" against possible AA (Adverse Action) by an issuer. A few years ago BoA closed my LOC because they said I had enough credit. The CL happened to be my highest at $26,500. Fortunately my other balances were low enough and my remaining CL's high enough that my utilization wasn't affected all that much but that loss of CL could have really hurt my score if my utilization had risen drastically.

And you are correct that all anyone has to do is properly manage their utilization from month to month. But this isn't a perfect world and things happen; life gets in the way and there are times when some balances are carried forward.

Re: Importance of Credit Lines

LS2982 — Tue, 10 Apr 2012 01:05:45 GMT

@MarineVietVet wrote:
@Goal810 wrote:
What is the importance of credit lines? If it is for utilization I don't get it, because regardless of what the credit line is, one just has to pay off the right amount before the CC company reports to the credit bureaus and any utilization % can be achieved. Is there another reason to try to get a high CL?

I've noticed a lot of the top FICO scorers have high credit lines, looking LONG-TERM, assuming there is another reason to get high CLs, should I aim to get certain kinds of CCs in order to achieve this? Right now I have the following cards:

Bank of America
Capital One
Discover Card
Associated Bank

Thanks!

One reason I do it is to have a "buffer" against possible AA (Adverse Action) by an issuer. A few years ago BoA closed my LOC because they said I had enough credit. The CL happened to be my highest at $26,500. Fortunately my other balances were low enough and my remaining CL's high enough that my utilization wasn't affected all that much but that loss of CL could have really hurt my score if my utilization had risen drastically.

And you are correct that all anyone has to do is properly manage their utilization from month to month. But this isn't a perfect world and things happen; life gets in the way and there are times when some balances are carried forward.

Re: Importance of Credit Lines

pizzadude — Tue, 10 Apr 2012 01:06:33 GMT

You are correct that you don't need to have high Credit Limits on your revolving cards to be a FICO high achiever. FICO scores your utilization against the limit, so as long as you can manage the reporting utilization then you'll be fine.

Many FAKO scores however will ding you for having low limits, their scoring advice will tell you that is something that you need to work on. But FICO doesn't care about how high the limits are, just the utilization.

Re: Importance of Credit Lines

Gollum — Tue, 10 Apr 2012 06:39:39 GMT

@Goal810 wrote:
What is the importance of credit lines? If it is for utilization I don't get it, because regardless of what the credit line is, one just has to pay off the right amount before the CC company reports to the credit bureaus and any utilization % can be achieved. Is there another reason to try to get a high CL?

I've noticed a lot of the top FICO scorers have high credit lines, looking LONG-TERM, assuming there is another reason to get high CLs, should I aim to get certain kinds of CCs in order to achieve this? Right now I have the following cards:

Bank of America
Capital One
Discover Card
Associated Bank

Thanks!

Only an infinitesimal percentage of credit-card-holders post to this forum, and that distribution of posters is skewed toward those building/rebuilding credit.

After learning about how credit works, some people become fixated on maximizing certain aspects of credit cards.

Different banks have different policies regarding their level of risk for the credit cards they issue.

FICO "likes" low-balance, high-credit-limit, but each bank has its own criteria/standards. Some banks will even turn down an application from someone with a high FICO score because he/she is deemed to have "too much available credit."

Looking long-term, FICO "likes" a mix of credit lines (home mortgage, car loan, credit card, for example).

You might also find some satisfaction in not having a credit card from one of the "too big to fail" megabanks.

Re: Importance of Credit Lines

Walt_K — Tue, 10 Apr 2012 13:32:26 GMT

The other obvious reason to have high credit lines is for the financial flexibility. It's not all about credit score. It's a lot easier to purchase flights, hotel, etc. for a family vacation if you don't have to spread it across several credit cards, or worry about making multiple payments mid-trip.

Re: Importance of Credit Lines

clocktick — Tue, 10 Apr 2012 13:35:28 GMT

@Walt_K wrote:
The other obvious reason to have high credit lines is for the financial flexibility. It's not all about credit score. It's a lot easier to purchase flights, hotel, etc. for a family vacation if you don't have to spread it across several credit cards, or worry about making multiple payments mid-trip.

This is true, especially for vacations and larger purchases where I just want to keep like things on one card. Also, I don't pay before the statement cuts usually so all my balances report. I'd rather them report without looking maxes out so the higher CLs, the better.