topic Re: Should I Ask To Have Credit Limit Reduced? in Understanding FICO® Scoring

Should I Ask To Have Credit Limit Reduced?

Anonymous — Thu, 19 Apr 2007 01:14:26 GMT

I have a Master Card with a 32K credit limit but zero balance. Will it hurt my Fico score if I ask them to reduce the limit to 5K. I don't need more than that.

Message Edited by steve48 on 04-18-2007 06:14 PM

Re: Should I Ask To Have Credit Limit Reduced?

Anonymous — Thu, 19 Apr 2007 01:34:56 GMT

Depends on other factors, but likely yes. If you don't need the full credit line, then don't take advantage of it.

Re: Should I Ask To Have Credit Limit Reduced?

Anonymous — Thu, 19 Apr 2007 14:44:22 GMT

steve48 wrote:
I have a Master Card with a 32K credit limit but zero balance. Will it hurt my Fico score if I ask them to reduce the limit to 5K. I don't need more than that.

Message Edited by steve48 on 04-18-2007 06:14 PM

Steve, the thing is with that type of unutilized limit a lot of creditors may shy away from issuing you more credit. If you need 5K and are sure you won't go above that, this limit is in line with utilization between 10-30% hoever if you find it unlikely that you will ever hve %k on the card in one month's reporting time, you could request a lower limit.

As far as it affecting your score. This would happen if reducing this limit, combined with the other reported balances would cause your overall utilization to exceed the ideal 10-30%

Re: Should I Ask To Have Credit Limit Reduced?

Anonymous — Thu, 19 Apr 2007 14:51:09 GMT

@Anonymous wrote:

@Anonymous wrote:
I have a Master Card with a 32K credit limit but zero balance. Will it hurt my Fico score if I ask them to reduce the limit to 5K. I don't need more than that.

Message Edited by steve48 on 04-18-2007 06:14 PM
Steve, the thing is with that type of unutilized limit a lot of creditors may shy away from issuing you more credit. If you need 5K and are sure you won't go above that, this limit is in line with utilization between 10-30% hoever if you find it unlikely that you will ever hve %k on the card in one month's reporting time, you could request a lower limit.
As far as it affecting your score. This would happen if reducing this limit, combined with the other reported balances would cause your overall utilization to exceed the ideal 10-30%

It's that old but true concept of diminishing returns applied to credit limits.

Going from $0 to $2000 helps your FICO a lot.
Going from $2000 to $5000 or so helps your FICO
Going from $5000 to $10K helps a little.
Beyond that...the effects on FICO diminish to almost nil and creditors that do manual reviews do get nervous that you might just go on a binge.