Credit to income Ratio & How much available credit is too much?

[Tonya-E]

I would like to know how much available credit is too much? Or better yet, when is credit to income ratio too high? I would like to reduce my cards within the next 12 months, if that is even wise to do. I am gardening for that time as I do not like/wish too app to much within a specified period of time. I know I would like to keep Amex BCP - as I find it extremely useful in my spending habits. I have kept Target since it is my oldest card (had it for about 16 or 17 years) and I do shop there. I will likely keep Barclays simply due to the available credit and the 2x category on a chunk of my monthly bills. Now, before people jump on the Barclays bashing wagon, they have never been shady with me. When I got promoted, my income nearly doubled. I took on some of my husband's and daughter's debt as a balace transfer on that card since I was making more money. I paid it and was never balanced chased. And mind you, I took on 90% of my available 22k credit- still no problems and I never updated my income (I just updated income on all cards a month ago, except Barclays as I couldn't find an area to do that). Lowe's I recently acquired. I considered it could be useful for some home upgrades I am doing in the next year to prepare our home for the market. I would probably replace Amex BCE or Citi Simplicity with a travel card and get rid of the 2?? I do shop at Walmart regularly so I mean that one doesn't hurt to have but isn't necessarily needed I guess. I do get cash back on that as well though. I know a card with travel perks would be the most beneficial for me. I have discussed some options on other threads and got some awesome advice.

I don't know if this is even wise to do. Should I just leave what I have? I don't have any issues. I don't really carry balances unless utilizing a 0% BT and I make sure to rotate spending on each card on a regular basis. I am at around 97% of my yearly income in available credit now (I do not include my spouse's income on apps). I just want to make sure that this isn't an issue down the road when we are ready to build our new home and want to get financing.

Getting then concensus on the initial questions will help me to make a solid decision. The older threads I could find are from years and years ago.

Thanks in advance!

[Anonymous]

I'm well over my yearly income in available credit; it's not an issue. 

I perosnally feel that if credit has been extended on a card with no AF that there's no need to close the account if I'm not using it. If the lended decides to that's fine, I prefer to just let them stay open until then to pad my UTI and AAoA. I do close AF cards for non-use though. Any cards I don't want to lose I put spend on occasionally. 

[Anonymous]

You'll find plenty of people on this forum that have total credit limits equal to or greater than their income.  There are lots actually that land in the 2X range or so (I am one of them) and then some that are in the 3X-5X range.  I'm not sure I've seen many at > 5X their income on total combined limits, but there are probably a few outliers.

[Tonya-E]

@dyn Ok this is good to keep in mind. The only card I have with an annual fee is the Amex BCP and I use it enough to far outweigh the yearly fee. So it is beneficial. Thank you for your input. Years ago (and I haven't been up here for a while), I thought it was stated that having too many cards could prevent attaining new credit (mortgage, car loan, etc.). It's been a long time though. My info is probably outdated.

[Tonya-E]

@Brutal..Thanks for responding! I just wanted to make sure I wasn't doing something that could be detrimental to me down the road. If it won't cause issues then maybe I should just leave things where they are. I certainly don't plan to get any more cards at all. When I find the travel one I want, it will replace one. Maybe that is the only change I need to make.

[Anonymous]

Tonya,

I think you're overthinking things when you talk about swapping 2 cards for 1 new one.  Simplicity is good to an extent but, keeping your cards diversified is something to think about as well.  There's nothing wrong with having a multiple of your income in CL's as many of us do.  The issue you might run into where that's not appealing is with some of the CU's since they tend to base things on DTI/CL to Income moreso than a big bank.

When it comes down to it having more credit available makes things easier for when you have to use it. Also, getting credit is easier when you want it and not need it.  If you find cards that work better now than the ones you already have it's okay to keep those cards and use them every once in awhile.  

As to the "I thought it was stated that having too many cards could prevent attaining new credit (mortgage, car loan, etc.)."  This has never been true.  Now, if you have too much DEBT it's going to affect your ability to do that sort of thing.  

[Tonya-E]

@Obscure-Expert

I overthink EVERYTHING So you're on the money there!  I read and read on these topics and often times over-analyze! I have seen people report that they were told to close some of their credit cards because they had too much credit available to them. The lender was afraid of the possibility of them using that credit (maxing out), and thereby hindering their ability to pay. NOW, the left out part is what their DTI was. And that was the part I left out of my thinking. I have to factor that in as it is a key component.

[Anonymous]

I can safely say it's not true.  I've had several auto and mortgage loans and it's never been an issue.  

When banks look at the big picture of course they're going to look at your maximum potential but, if you're managing things correctly it shouldn't throw any flags when you're in UW.  You could have a million in CL's like some around here do and only make 100K/yr but still keep your balances in check and get approved for anything you want.  A little self control goes a long way when it comes to credit working for you.  

There's a lot of alternative facts around the internet and even in real life.  The best approach is to research it and decide for yourself.  

[sarge12]

OP, I am not sure there really is a maximum credit limit...but truthfully the credit limit your card shows is not really a credit limit. If a debtor always pays in full and suddenly starts trying to max out all their cards, they will find that limit is not real, and those limits will be cut quickly. The main reason for CLI's is to have and maintain low utilization. I have no idea at what point of charging would result in AA, but many times an abnormal charge has prompted the issuer to call me before approval. The issuers are constantly looking at unusual activity. My current credit limits are probably 5 times my reported income. I can within limits, report my income as whatever I wish. Since my income is determined by how much I wish to withdraw per year on a fairly large 401k and Retirement accounts. I report all my SSDI, and about 20,000 in withdrawals each year, but the withdrawals can be more or less if need be. I am almost 61 and in fairly bad health, so I doubt very seriously I will spend anything near what I have, and I have no spouse and children.

[AverageJoesCredit]

With your probable high income and scores, you are fine. Keeping low util is key but we usually get credit limits the lender feels we can handle. Im one of Brutals outliers lol. I have more credit than my income can support but because im handling it responsibly, it hasnt really stopped me getting approvals