I've been around these forums for a few months now and I'm loving all the great advice. I've made some progress on my scores and will make more. The one thing I just don't seem to quite get is the reasoning behind having 100K or more in CC credit limits.
I understand that the higher limits then the higher balances you can carry and still keep your utilization low. Everyone knows low utilization helps your scores, but this also seems risky to me. Utilization has no memory between months and if you are able to PIF every single month, then that is great. But we all know life happens. Cars break down, accidents happen, whatever. Its great to be able to swipe a card and take care of those types of things, but then you are left with that balance, that you probably have not budgeted for.
This is where I get concerned. I went for years without any cards and I managed to get through these types of situations anyway. Although now it's easier as I have a credit line to cover those unexpected expenses. My air conditioner went out on my car and I've just been dealing with it for over a month as I did not want to spend the cash as I'm working on building back up my reserves. I was expecting maybe a 3-400 dollar bill, but the quote was 1200+. I found my self-saying okay go ahead and by the way do you guys accept Discover.
Now $1200 is not a lot and I can pay it off within a month or so without really touching my current reserves, but it will put a dent in me rebuilding the reserve after the money I spent buying a home last month for a couple of months.
Anyway, this got me to thinking about how a lot of people work towards getting these huge credit limits and I have been thinking that should be my goal too as I continue to rebuild. I'm starting to rethink that. Credit cards are what got me into trouble originally( or my not so smart use of them) and that is true of a lot of people here. Almost everyone in the BK forum always lists a huge CC debt as one of the things that they burned a credit with and lots of the time, they have stated not being able to make the payments is what started the path to BK.
It's easy to make a decision to just swipe a card when there may be other options available, so I see this as a risk to my future. I'm still going to put my car repairs on the discover just to get the cash back, but I'm also going to just pull the payment out of my reserves for now and not carry a balance for a couple of months like I planned.
So to my question. Is there any reason for having this much available credit other than perhaps bragging rights in terms of scoring? I can see having the 3 cards and do the AZEO method for a temp score boost, but really if you have 3 cards with 15K CL and carry a 1-3% utilization, the score wise I don't see how having 20-30 cards with 150K and a 1-3% utilization will do anything different for your score. I just see more risk if you do have an unexpected problem and you may not think of the best ways to solve it without incurring debt. What am I missing here?
You summed up alot about why people have 100k in credit in your own post. This thread will start the inevitable defensive replies or I only need 3 cards because i pif defense. Prepare yourself for it but hopefully everyone keeps it FSR
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My only partake will be your comment on perhaps bragging rights. This is a misconception and i firmly believe most of us with 100k in credit dont do it for bragging rights. Just be wary throwing around that term because if i commented on it , there are bound to be multiple people here who would too.
.My only partake will be your comment on perhaps bragging rights. This is a misconception and i firmly believe most of us with 100k in credit dont do it for bragging rights. Just be wary throwing around that term because if i commented on it , there are bound to be multiple people here who would too.
@AverageJoesCredit wrote:
You summed up alot about why people have 100k in credit in your own post. This thread will start the inevitable defensive replies or I only need 3 cards because i pif defense. Prepare yourself for it but hopefully everyone keeps it FSR
My only partake will be your comment on perhaps bragging rights. This is a misconception and i firmly believe most of us with 100k in credit dont do it for bragging rights. Just be wary throwing around that term because if i commented on it , there are bound to be multiple people here who would too.
While "bragging rights" is perhaps too strong, I think a lot of it is group think: Everyone here seems to have XXXX in total cl, so I probably should work towards that as well
You kind of answered your own question. If you only have $2000 in credit and get a $1000 auto bill, youre now at 50% utilization. If you had $5000, you'd be at 20%, $10,000 would be 10% and so on. The AZEO (All Zero Except One) method is the best way to maximize your score and you need to be below 8.9% utilization to get the benefits. That means, if you had a $1000 auto bill, you would need $11,175 in available credit to still have the best score possible. That number goes up the more you charge each month, which isn't a problem if you pif, but if you need to carry a balance for any reason, your score takes a hit. Why would you carry a balance? If you have a 0% rate on a card, why not? Also, if you have any other unexpected costs suddenly come up such as a funeral or medical which can be pricey, having a huge buffer keeps your score up.
My reasoning is this and it's twofold.
For one, Different income brackets create different expenses for people. You had a car expense that hit you for 1200, someone with a luxury brand may have a cost for 5200. If your income gets into that high end phase an you are spending on youself accordingly (as you should and any rational person does) things get more expensive and having those high CLs are super helpful.
That's just one reason, and it vaguely skims your question because you brought up 3 cards 15k vs 20 cards with 100k+
For me, I think pursuing those higher limits is a sign of ambition, not wanting to be told you can only put out 15k at one time in contrast to 100k. There's a flaw in the thinking there, but it stems beyond that. Someone with a 30k income probably won't get a higher TCL than 60k. Being able to cross that threshold once you approach it is an ego boost, it's tangible proof that you've achieved more than you previously have. For example, as a student with a 25k income my credit only pushes so far. After law school, let's say my income is 100k, even though I may not feel the effects of that income for several years due to students loans, new other expenses, my credit line will increase substantially. I likey won't use it, but to me knowing I now have the abillity to put out 100k+ at a moments notice just makes it feel like you've really accomplished something special. It's one of those things in life that some people don't care about and hence alot of people are content with 15k and that's perfectly acceptable. For someone like me that likes to see my efforts firsthand, I just feel like all my ambition to build and improve pays off.
Everyone has a goal, for some people it's building up poor credit to good/great/excellent credit. For others, it's security, percieved financial power, or even as Joe said, "bragging rights" 
@AverageJoesCredit wrote:
You summed up alot about why people have 100k in credit in your own post. This thread will start the inevitable defensive replies or I only need 3 cards because i pif defense. Prepare yourself for it but hopefully everyone keeps it FSR
My only partake will be your comment on perhaps bragging rights. This is a misconception and i firmly believe most of us with 100k in credit dont do it for bragging rights. Just be wary throwing around that term because if i commented on it , there are bound to be multiple people here who would too.
I have over 200k in limits and I am not trying for them. Other than asking for a CLI on a NFCU card I have not seeked limits and have actually asked for decreased limits on some cards. I only know my total limit because Credit Karma shows me my total limit.
Here we go again
My reason for pursuing high credit limits is simple. Its because I can. Perhaps its a function of experience but one thing I've learned, and which has been reinforced as an active participant in these forums, is to worry about my own actions and decisions and not worry about what others are doing, especially when their actions don't affect me directly.