topic Re: Total Credit Limit versus Income ? in General Credit Topics

Total Credit Limit versus Income ?

GApeachy — Sun, 19 Jan 2020 02:41:19 GMT

I found an old thread (2015) stating a 2:1 ratio. Is that what we should be striving for in 2020? Or does it even matter?

Re: Total Credit Limit versus Income ?

Remedios — Sat, 18 Jan 2020 22:24:57 GMT

Income is taken into consideration in two ways

One is your total exposure with a single lender relative to your income, and your total credit lines relative to your income.

As far as what you're supposed to shoot for, that's really up to you

Shoot for the stars on cards you use, get some extra for utilization padding and dont worry about anything else.

You will get approvals, denials, CLIs based on various factors, income is just one piece of the puzzle.

Dont worry about these things, they are just guesses

Some cannot get 10% of their income, others have total CLs that are many times over their yearly income

Focus on rewards your cards offer, minimize interest payments, and enjoy life

Re: Total Credit Limit versus Income ?

GApeachy — Sat, 18 Jan 2020 23:04:06 GMT

@Remedios wrote:

they are just guesses

Okay, that makes more sense when reading here that ppl with lots of credit continue to get lots of credit even though they don't use a sizeable portion of their credit. ty

Re: Total Credit Limit versus Income ?

Remedios — Sat, 18 Jan 2020 23:12:00 GMT

Some lenders like Synch have known exposure ceilings, some tend to settle in particular range, and some simply follow their own secret sauce formula.

I think often times denial reason for "too much available credit" doesnt really refer to sum of credit lines, or individual TLs, it's more or less "you ain't even using what you got, why give you more" unless it's one of CUs who loathe those with plenty of available credit

Cant say I blame them.

Re: Total Credit Limit versus Income ?

AverageJoesCredit — Sun, 19 Jan 2020 00:14:47 GMT

Income always wins. Id take income over a cl. I wont get into one should do this or that, whatever is right for you is right. Lenders wont let us use whole limits anyway but im still amazed at what ive achieved limit wise. I just need to find the nerve to say fico it let it all go and stay with 3 cards

Re: Total Credit Limit versus Income ?

GApeachy — Sun, 19 Jan 2020 00:23:10 GMT

@Remedios wrote:

Cant say I blame them.

Yeah, I don't either.

Re: Total Credit Limit versus Income ?

Anonymous — Sun, 19 Jan 2020 00:24:06 GMT

My personal preference is to have limits around 5 to 10 times routine pay-in-full spend. And to have it where I can throw an occasional big (for me) expense on there at 0% that can be comfortably paid by the end, and that not go above 30% of the card limit.

This lets me use accounts in a healthy manner and minimize score changes- because, to be honest, there's no change in fiscal health whether I put $1000 on a credit card or debit. Now there *might* be if I put $10,000 on it, or worse... :-x. I think that FICO is often too harsh in scoring low debts and sometimes too light for moderate to high debts, so this is my method to smooth out that system.

Like a lot of MyFicoers, it's become a bit of a game and I've gone over my own recommended minimum. I'm currently a bit over 2:1 for TCL:Income and I'm guessing it'll be closer to 3:1 at the end of the year even with non-aggressive soft-pull CLI and no new accounts.

Re: Total Credit Limit versus Income ?

Shooting-For-800 — Sun, 19 Jan 2020 00:53:07 GMT

It is nice to not worry about utilization.

It is also nice to not have all your eggs in the same basket or two.

It is a personal choice.

I never get new cards with an AF to increase my available credit.

I pay a total of $108 ($59+49) in AFs and my wife pays $95.

Re: Total Credit Limit versus Income ?

M_Smart007 — Sun, 19 Jan 2020 05:01:09 GMT

@AverageJoesCredit wrote:
Income always wins. Id take income over a cl. I wont get into one should do this or that, whatever is right for you is right. Lenders wont let us use whole limits anyway but im still amazed at what ive achieved limit wise. I just need to find the nerve to say fico it let it all go and stay with 3 cards

You have to get life coaching from @pinkandgrey on that!

Re: Total Credit Limit versus Income ?

Remedios — Sun, 19 Jan 2020 05:46:02 GMT

Well, in fairness, those cards were closed only because limits were found to be unacceptable, not for simplification.

Nothing wrong with three cards, though. I seldom use more than three in any given month.

Re: Total Credit Limit versus Income ?

tcbofade — Sun, 19 Jan 2020 12:07:26 GMT

I'll look later, but my total credit lines are probably around five times my annual income.

DW might be at six or seven times her annual income.

Conservative credit unions frown at us, but big box banks don't seem to mind...

Re: Total Credit Limit versus Income ?

GApeachy — Sun, 19 Jan 2020 13:32:16 GMT

@tcbofade wrote:
Conservative credit unions frown at us

My CU is conservative. I hope they don't frown at us when the time comes.

Re: Total Credit Limit versus Income ?

CreditInspired — Sun, 19 Jan 2020 13:27:55 GMT

IDK but I'm actually a teensy bit above 2:1 ratio but not by design. I really just focus on having the UT padding for when I do want to make a larger than usual spend.

And, personally, I feel quite comfortable at this ratio now that I've taken the time to think about it, which I never have before.

Thanks GApeachy for asking the question. It gave me pause for thought.

Re: Total Credit Limit versus Income ?

GApeachy — Sun, 19 Jan 2020 13:38:33 GMT

@CreditInspired

Combined dh and I are 2:1 or a hair above. Don't know if CU/banks look at it that way or not. If they don't that's great! (eta: a few months back I have trimmed the fat thinking that was a good thing; plus it made life easier.)

Re: Total Credit Limit versus Income ?

tcbofade — Sun, 19 Jan 2020 14:19:39 GMT

None of you are wrong, I am not yet ready to trim the fat... still need the utilization padding as we pay off debt with the help of the zero percent balance transfer shuffle...

Current overall credit lines are 7.6 times my annual income.

DW overall lines are 6.9 times her annual income.

Re: Total Credit Limit versus Income ?

GApeachy — Sun, 19 Jan 2020 16:36:53 GMT

@CreditInspired wrote:
Thanks GApeachy for asking the question. It gave me pause for thought.

Idk if it really means all that much or not; wanted to know. Like @Remedios pointed out, CU's don't like an avg. client having an overabundance of available credit when looking to extend more credit...like why bother, right? I'm preparing for a refinance at my local CU in a little over a year....I wanna look goooooood; not shabby.

Re: Total Credit Limit versus Income ?

tacpoly — Mon, 20 Jan 2020 18:34:13 GMT

I'm the myFico counter-example with tcl only around 20% of total income.

Re: Total Credit Limit versus Income ?

Gmood1 — Tue, 21 Jan 2020 01:21:42 GMT

You'll find CUs that don't give a hoot about available credit and the same goes for large banks.
I've also seen the opposite with both.
Most of the time. It's not the lender, but a UW with nothing better to do but nitpick. 😂

There's no magic formula to the ratio.

When it comes to loans that are collateral based or secured loans( auto or home). As long as you pay your bills on time and have no late or missed payments. Along with the ability to repay the loan.
No one really cares how much available unsecured credit you have IME.

It's tough to deny a person for such loans. When the UW can plainly see by your credit reports that you're able to manage multiple accounts and remain blemish free.

When it comes to finances. There's a world full of folks that are high earners but can't manage their way out of a paper bag.😂
That person may not deserve lines of credit, their income may support under different circumstances.

If having a multitude of revolving lines makes you look shabby. I'm definitely one of the shabby ones 😂

Re: Total Credit Limit versus Income ?

GApeachy — Tue, 21 Jan 2020 02:00:26 GMT

@Gmood1 wrote:
When it comes to finances. There's a world full of folks that are high earners but can't manage their way out of a paper bag.😂
Yeah!

If having a multitude of revolving lines makes you look shabby. I'm definitely one of the shabby ones 😂

Lol! Thank you for responding.......In your case how's about "Shabby Sheek" (I'd gladly take that)

Really just saw the old thread relating to the 2:1 ratio; thinking about our upcoming refinance and wanted to know how income/total available credit is viewed today 2020 vs. the OP of 2015.

Our total credit limit is not huge; our income is not huge...that's why I want to optimize my cr's before my conserative CU under writing lays eyes on our reports. Want a good balance if balance matters.

Re: Total Credit Limit versus Income ?

Revelate — Tue, 21 Jan 2020 07:01:40 GMT

I'm about 1:1 currently if I look at my higher paying gig... though given that wasn't consistent through the entire year using the one that was it's more like 1.375:1 objectively.

Frankly that's about 40x what I have reported in any given month and those are months I make tax payments too, it's more absurd in a normal month. Back in 2013ish I never expected to need/want more than 50K in TCL and that would still be appropriate honestly, but then my approvals jump-shifted from 5-7.5K range into the 22-30K range for the majority of my approvals and my TCL rose substantially as a result.

I just haven't closed any tradelines even if I took a strategic CLD on some of them... whenever we have a downturn I'm expecting to get half of them whacked so my thought is with more than I need but not absurd compared to income I have a good chance of coming through with more than enough credit to not worry about it even if I can always pretty up when needed anyway by pre-paying I'd rather not to (got grace period, use it, adds up over time) without maxing my tradelines as if we do have a pull-back, lenders will probably go back to caring about such things again whereas they don't now unless there are other red flags.