topic Re: Too much credit? in Credit Cards

Too much credit?

Anonymous — Sat, 19 Oct 2013 21:12:35 GMT

I understand the benefits of having high total CLs. However, on the other hand, I am slightly concered that my high credit to income ratio might affect my future credit card applications. Here are my details:

total CL is 20k, income is 26k

6 cards, AAoa 7 months, oldest card 2 years

6 inqueries in 2013, No bads, util < 10%

Latest score 710+

I have been gardening for 2 months and will still be doing so until 2014/04. After that, my plan is to apply for CSP and Citi TY Pref but I am worried about my credit to income ratio being high. Is it ineed high? And if so, any suggestions? BTW, personally, I like high CLs but I do not badly want them... Moderate CLs work for me just fine.

Re: Too much credit?

Anonymous — Sat, 19 Oct 2013 21:54:57 GMT

At some point you'll reach the maximum exposure each creditor is willing to extend you based on income. If you apply for a new card with that creditor they may give you a low CL or have you reallocate existing credit over to the new card. Some creditors also factor in your total available credit across all cards when making such decisions.

Re: Too much credit?

09Lexie — Sat, 19 Oct 2013 22:00:43 GMT

Perhaps not too high now but if you decide to app for cc's with $5k min CL's ie CSP and continue with CLI's on your current portfolio -then yes. As far as the CSP is concerned, your current income is too low to reap the benefits.

IIRC, the annual spend should be somewhere around $30k to even offset the AF.

Re: Too much credit?

Anonymous — Sat, 19 Oct 2013 22:02:54 GMT

My income level is about the same and I decide not to go with CSP or BCP.

Re: Too much credit?

Anonymous — Sat, 19 Oct 2013 22:18:10 GMT

Thanks for your reply, 09Lexie. I believe in my situiation it will make sense though. I am a frequent flyer and expect to graduate within two years. Even ignoring these factors, the 40k signup bonus is worth at least 5 years' AF.

Re: Too much credit?

09Lexie — Sat, 19 Oct 2013 22:24:16 GMT

I agree the signup bonus is worth the AF. Your OP asked if you had too much credit. Based on your current stats, you are close.

Re: Too much credit?

Anonymous — Sat, 19 Oct 2013 22:26:49 GMT

Totally agree =) Thanks for the info!

Re: Too much credit?

coldnmn — Sat, 19 Oct 2013 23:12:10 GMT

My income is $25k net and have $37.7k CL and feel the same way. I got a Sam's Discover yesterday and regreted it even though I'll use it. I don't think it matters as much if you keep the balances low.

Re: Too much credit?

12njoy — Sat, 19 Oct 2013 23:20:43 GMT

I've reached one of my creditor's maximum credit (USAA). They will not extend me any more credit and I'm okay with that.

Re: Too much credit?

youngandcreditwrthy — Sat, 19 Oct 2013 23:50:33 GMT

Just keep util low.
It's unfortunate that banks are far more limited by income now, even if you have an 800 FICO.
Good luck!

Re: Too much credit?

09Lexie — Sat, 19 Oct 2013 23:55:16 GMT

@young

I would think ones ability to pay outweighs a credit score. What would be the purpose of granting a $20k CL to someone who makes less than $10k?

Re: Too much credit?

youngandcreditwrthy — Sun, 20 Oct 2013 00:03:12 GMT

Having a high credit line doesn't mean it will get used; imo, you wouldn't want to use more than $2k of a $20k line anyway. You misinterpreted what I meant.
The case Im referring to is: say an elderly person has a low income of only the return on their assets(say a $1 million in bonds) of maybe $20k per year.
They can pay far beyond their income.

Re: Too much credit?

09Lexie — Sun, 20 Oct 2013 00:05:13 GMT

When lenders grant CL's they will assume it may be used. The ability to pay, whether it's by income or assets -Amex- should be considered.

Re: Too much credit?

Pat94108 — Sun, 20 Oct 2013 00:11:34 GMT

@09Lexie wrote:
@Anonymous

I would think ones ability to pay outweighs a credit score. What would be the purpose of granting a $20k CL to someone who makes less than $10k?

+1 I agree wtih that.

Re: Too much credit?

youngandcreditwrthy — Sun, 20 Oct 2013 00:14:00 GMT

I think Amex is the only lender that asks for assets on the app.
For some people, assets are what matter most- not a lot, but Idk 20-30%.

Re: Too much credit?

09Lexie — Sun, 20 Oct 2013 00:17:02 GMT

And assets, in most cases would have to be liquidated in order to pay a bill. Living within your means to me, means not having to liquidate or use assets to pay Chase.

Re: Too much credit?

coldnmn — Sun, 20 Oct 2013 00:23:53 GMT

+1! My home and autos are paid for may have something to do with my limits. It made it tough to get credit cards with no revolving debt to start out.

Re: Too much credit?

youngandcreditwrthy — Sun, 20 Oct 2013 00:35:04 GMT

Elderly folks with limited income liquidate assets on the reg to cover bills.
Nbd,
I was just pointing out the relevent point to the poster's topic that the CARD Act has caused banks to be more prohibitive of higher credit lines with respect to income.

Re: Too much credit?

Anonymous — Sun, 20 Oct 2013 00:40:08 GMT

@09Lexie wrote:
When lenders grant CL's they will assume it may be used. The ability to pay, whether it's by income or assets -Amex- should be considered.

+1.

They grant you credit because they assume you are going to use it.

@youngandcreditwrthy wrote:
Having a high credit line doesn't mean it will get used; imo, you wouldn't want to use more than $2k of a $20k line anyway. You misinterpreted what I meant.
The case Im referring to is: say an elderly person has a low income of only the return on their assets(say a $1 million in bonds) of maybe $20k per year.
They can pay far beyond their income.

If you are going to only use 2k out of the 20k they extend to you, they will rather extend the other 18k to other customers whom are going to use it. If you do not use the credit the bank is offering to you, they're not making any money off you, and banks don't want that.

Also for someone who have 1 million in bonds, he can easily set up a private banking relationship, and the private bank will gladly offer him a high CL, part of which may be guaranteed by his investments with that bank. There are many ways to go around doing this, and most private banks are pretty flexible.
However, not everyone has 1 million in bonds / (semi) liquid assets sitting around that can be invested into a bank.

For elderly folks that are wealthy, they may not even need credit. They can simply just pay everything off with cash. If not, set up a private bank account.

For elderly folks that are not wealthy and have limited income, their offsprings and/or government can be their credit line.

@09Lexie wrote:
And assets, in most cases would have to be liquidated in order to pay a bill. Living within your means to me, means not having to liquidate or use assets to pay Chase.

+1. Using your non-liquid assets (property for instance) to repay your debt is pretty much the worst case scenario.

Re: Too much credit?

youngandcreditwrthy — Sun, 20 Oct 2013 00:46:46 GMT

No one said anything about selling a house to pay cc bills. Per FICO scoring, having a reported maxxed out card is no bueno.
Most folks don't know to pif before statement cutting to max score.