Any downside to having big limits?

[UncleB]

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@Blackbeauty212 wrote:

Hoarding Credit is Bad ... and it can adversely affect your ability to borrow in the Future. There is a such thing as "Too Much Available Credit" 

* Most Mortage lenders will reject, request accounts be closed or limits reduced before allowing approval. 

* Credit Unions will decline or require strict manual review based on Available Credit. 

* Economic downturns like '08 puts a bullseye right on your back when Creditors come for Slashing Exposure. 

With that said 4 cards with High limits is not something I would worry about. However I still wouldn't go around app spree'ing, opening a bunch of new cards. IF you're going to open a new card, I would consider closing an existing one, especially if the Lender comes close or matches the current limit on your exisiting card so that your not adversely affecting your UTL score. 

I would much rather have just 4 cards with >20K limits, than say 10-15-20 cards to manage regardless of their limits.. I personally have a internal limit, I don't want any of my TL's >20K, there's nothing I need on a Credit Card >20K limit can't afford me. 

Don't get caught up in the Vanity that "CREDIT = INCOME" ... Too many people are vicitims of thinking the "More Credit I have, the More Weathly I am, the More Status I Have". You see it right here in this forum. No reason someone with $50K year income has 200K worth of Available Credit.  

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While I agree with most of your statements here, I will only add that your first two bullet items are YMMV.  Also, a "large amount of available credit" is always subjective - I've never seen a bank or CU actually define what they consider 'large' when it comes to exposure, since it can vary from customer to customer.  

Specifically when it comes to mortgages (something I know a little bit about) it really depends on the bank/broker you use and the specific program you apply with.  Obviously at some extreme point it could be problematic, but that point will be different for each of us based on our resources and specific credit profile.  This is why I always stress to people to not reduce any credit lines unless you're instructed to do so by your broker, since it's not always required (or even desired).

With credit unions it's also YMMV depending on the specific credit union... so far I don't recall NFCU having an issue with someone having too much available credit, however with other credit unions (NASA, PenFed) it is known to be a problem.  Again, it's YMMV.

I completely agree that credit ≠ income, although many people treat it as if it does.  As for no one with $50k/year annual income needing $200k in available credit, again that's YMMV and depends on the situation. 

[Anonymous]

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@RCFL wrote:
OP, did you put 45k as your income on the application or you put more than that? My income is higher but still stuck at 13.5k with Discover...

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Not OP but I have 14k limit on my Discover and my income is 32k.

In my eyes OP has balls of steel. My 14k limit is making me nervous, feels like too much exposure.

[Anonymous]

I've noticed US Bank is sometimes sensitive to overall credit with other lenders. Haven't really noticed with anyone else but that's just my experience.

[CF_Frost]

I definitely did not provide false income to any creditors (I can't figure out how to quote someone on here).  

Not sure if it is relevant, but my relationship with Discover has been since 2013.  Started with a $750 limit and have just grown it from there.

[Blackbeauty212]

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@UncleB wrote:

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@Blackbeauty212 wrote:

Hoarding Credit is Bad ... and it can adversely affect your ability to borrow in the Future. There is a such thing as "Too Much Available Credit" 

* Most Mortage lenders will reject, request accounts be closed or limits reduced before allowing approval. 

* Credit Unions will decline or require strict manual review based on Available Credit. 

* Economic downturns like '08 puts a bullseye right on your back when Creditors come for Slashing Exposure. 

With that said 4 cards with High limits is not something I would worry about. However I still wouldn't go around app spree'ing, opening a bunch of new cards. IF you're going to open a new card, I would consider closing an existing one, especially if the Lender comes close or matches the current limit on your exisiting card so that your not adversely affecting your UTL score. 

I would much rather have just 4 cards with >20K limits, than say 10-15-20 cards to manage regardless of their limits.. I personally have a internal limit, I don't want any of my TL's >20K, there's nothing I need on a Credit Card >20K limit can't afford me. 

Don't get caught up in the Vanity that "CREDIT = INCOME" ... Too many people are vicitims of thinking the "More Credit I have, the More Weathly I am, the More Status I Have". You see it right here in this forum. No reason someone with $50K year income has 200K worth of Available Credit.  

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While I agree with most of your statements here, I will only add that your first two bullet items are YMMV.  Also, a "large amount of available credit" is always subjective - I've never seen a bank or CU actually define what they consider 'large' when it comes to exposure, since it can vary from customer to customer.  

Specifically when it comes to mortgages (something I know a little bit about) it really depends on the bank/broker you use and the specific program you apply with.  Obviously at some extreme point it could be problematic, but that point will be different for each of us based on our resources and specific credit profile.  This is why I always stress to people to not reduce any credit lines unless you're instructed to do so by your broker, since it's not always required (or even desired).

With credit unions it's also YMMV depending on the specific credit union... so far I don't recall NFCU having an issue with someone having too much available credit, however with other credit unions (NASA, PenFed) it is known to be a problem.  Again, it's YMMV.

I completely agree that credit ≠ income, although many people treat it as if it does.  As for no one with $50k/year annual income needing $200k in available credit, again that's YMMV and depends on the situation. 

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You're right I should have prefaced by saying YMMV.. I personally think no individual should have more than x2 their personal household income in Available Credit. Anything over that I find to be just "credit hoarding" and can lead to trouble. If youre responsible with your credit then there's no reason you should ever need more than x2 your income in credit cards. 

Im not parenting anyone on how much credit they have or how many card they can carry, this is all personal decision making. I just laying out what constitutes responsible credit management in my book.

[UncleB]

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@CF_Frost wrote:

I definitely did not provide false income to any creditors (I can't figure out how to quote someone on here).  

Not sure if it is relevant, but my relationship with Discover has been since 2013.  Started with a $750 limit and have just grown it from there.

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How to quote a post:

http://ficoforums.myfico.com/t5/Community-Feature-FAQ-s/How-to-Quote-a-Post/td-p/2603189

(Note that in the diagram the spell check is now in a different place, but the 'Quote' button hasn't changed.)

[Gmood1]

I also see members here that assume other folks financial situation without knowing the individual or what their financial resources are. Six figure income doesn't equal you know how to manage money. I have friends and coworkers who incomes are inline with OPs. Now if you think because their income is not six figures they don't have the resources. The joke is on you. It's not always what you earn, it is how you use it. I know folks with six figure incomes that scrape by. I also know folks with 50k incomes the have several hundred thousand dollars at their finger tips when and if they ever need it. Sometimes when you think you know..you really don't. If I want to spend $25k on a card instead of paying cash. I want a card I can do it with.

[longtimelurker]

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@Gmood1 wrote:

I also see members here that assume other folks financial situation without knowing the individual or what their financial resources are. Six figure income doesn't equal you know how to manage money. I have friends and coworkers who incomes are inline with OPs. Now if you think because their income is not six figures they don't have the resources. The joke is on you. It's not always what you earn, it is how you use it. I know folks with six figure incomes that scrape by. I also know folks with 50k incomes the have several hundred thousand dollars at their finger tips when and if they ever need it. Sometimes when you think you know..you really don't. If I want to spend $25k on a card instead of paying cash. I want a card I can do it with.

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I agree. But.... there are also SOME people here who actually don't know what they are doing (with poor prior experience) and sometimes counter-messages to "CLI and and add new cards to the max" might be useful!   Unfortunately it is hard to distinguish the classes and impossible to target the messages to those that might benefit.

[Anonymous]

I dont think income should be the sole factor in determining what is a responsible credit limit. Someone with a high income may be irresponsible and if they come under hard times would be unable to pay debts.. someone with low income may have liquidible assets that justify higher limits OR may spend a lot for business and get reimbursed for it. MANY people spend a lot of money on travel expenses for example and are reimbursed by their employer. Everyone's situation is different.

[Burned2manybridgesB4]

One point not approached is the fact that some of us here, like me, have a 20+ year credit file, so big limits go with the territory of experience.

Yes, I'm a middle aged fart. My very first card was a JCP in '95.