Reasoning behind high CL's

[SBR249]

---

@dynamicvb wrote:

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.

---

I think that there is a key sentence. Having high available credit does not mean that one is automatically unconcerned about spending. On the contrary, lenders are willing to extend high CLs precisely because a borrower has shown through their actions and history of creditworthiness that they are careful about managing their money and not spending beyond their means. I don't want to turn this into a lecture, but I will just say that I personally budget for every $ I spend and whenever I swipe my card I will already know exactly where that money is going to come from and when I will pay it off.

You might ask what about unexpected expenses, and the answer is I (and from what I gather, you as well) have reserves for that as everyone should. Your next question might be, what if those unexpected expenses exceed your reserves? The answer is, I either work out a way to pay for them (even if that means taking on debt if it's that important) or not incur those expenses. The point is that when you have to spend that money, you have to spend it. If you have the CL, then that's a buffer for you when stuff hits the fan. A good question to ask yourself is, if you must foot that unexpected expense and you don't have the CL buffer, what do you do then? Chances are the alternatives you can think up are likely not better if not worse than CC borrowing. It all comes down to having the proper perspective on how and when to use your credit. 

[Anonymous]

I purchased my first home in December. With that, I needed a new fridge, new dishwasher, a washer and dryer, and some other minor improvements. I also hurt my back a couple summers ago and have been dealing with back pain from cheap mattresses. Having a high overall cl allowed me to spend $10,000 in one month and not take my utilization above 15%. Now that’s paid down to about $4,000... and I’m not concerned because the mattress firm card is 0% interest for like 50 months and the Lowe’s card is 0% for another 12, so I can widdle it down with a couple hundred every month and keep money in the bank and plenty to invest with. A higher overall cl keeps my credit score in the excellent range, and it saves me money in the long run.

[dynamicvb]

Thanks for all the responses. This one got busy quick. Perhaps I had a poor choice of words with bragging rights.

So it seems the consensus is that it gives you options and I totally agree as that was the only reason I could think about. I make decent money and could work towards these types of limits, but I’m just not sure it would be the right move for me. I was not intending to make this in anyway negative about what anyone else may do. Everyone must take their own path. I was just wondering if there was some secret sauce or help to your overall scores that having high CLs may provide you and from what I can gather this would only be true if you did need to carry a large balance for a while then you would not take as much a hit for your utilization.

[Anonymous]

If you were to ever need say a personal loan, I can see a high credit limit card helping by showing that you can manage money well. But if you need a loan for $10k, and your cards only add up to $7500, it may not be looked at as positive as say $50k total, especially under a manual review.

[Schwartzinator]

There is no right or wrong answer here, but there are some responses likely to be more logical than others. Personally, I think this would be a question better served for the general public than for the participants of the MF forums. The fact that everyone here (presumbly) knew what AZEO was without having to pull up a dictionary is a testimet to that. We fixate on ideal utilization rates, reward redemptions and interest rates even though we might always PIF. Why? likely because it's something we're passionate about for any number of underlying motives (sticking it to the bank, getting free travel, etc) and we're therefore far more likely to manage these limits responsibly. While I only have 3 cards--a number on the lowerend here, I would want them to have as high a limit as my profile supported. As someone else mentioned, it's a reflection of my responsibility to manage credit (good feels), while serving as a 30 day interest free loan to pay for the expenses I buy anyway without having to dip into my accounts until the due date. Additionally, it's an emergency fund if my reserves ran out or couldn't cover some unforseen event such as a massive medical bill for myself or a partner where their immediate health is more important than any debts or credit scores. In short, I'd rather have it and not need it, than *need* it and not have it. 

[Brian_Earl_Spilner]

---

@Anonymous wrote:

---

@Brian_Earl_Spilner wrote:

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.

---

Right, this is the standard explanation, but you have to ask "Do I always need the best score?"   Probably not.   Assuming you can always PIF (and if not, that's a bigger issue to address) you can do AZEO only when needed for a critical app, and let things report as they will at other times.

Now having very high CL DOES allow you to not do AZEO (and not doing it is good!) when apping for something important, as utilization will be small, but how many people here wouldn't do it anyway "just to be safe"

---

I'm a strong supporter of that. I feel people on here micro-manage their credit a little too much. If you're using it responsibly, applying for new credit shouldn't be problem. On the other hand, there are people like me that need to micro-manage due to rebuilding. 

[K-in-Boston]

Several have hit the nail on the head.  The primary reason is simply because I can and I expect it.  The secondary reason is that I like rewards, and as I recently found out several months in a row, even with what most here would consider to be a large credit line on my Amex SPG card, I kept exceeding the credit line when adding new charges to the statement balance.  It really comes down to how much one spends on a regular basis.  Unless it's a card for a very specialized purpose (like the Target card that I only use at Target), a card with a small limit is absolutely useless or difficult to use (looking at you, Citi Premier) for me.

[Kforce]

As many have said it depends a great deal on your income and spend.

Personal opinion as to a credit limits value,  and risk potential.

I only take auto or SP increases until I hit my number.

Call and have my account capped/locked at that level when reached

*

Just my opinion, and one way of setting a number.

Single credit card = Monthly gross Income

Would lower or stop getting more credit if I hit total credit line >=  Yearly Gross.

Maybe my formula will work as a middle ground between the extremes

[Remedios]

I thought " Why  you have such high limits" thread was scheduled for 10/01/18 

Here is to hoping " Why you have so many cards" gets rescheduled, too. 

[Kforce]

---

@Remedios wrote:

I thought " Why  you have such high limits" thread was scheduled for 10/01/18 

 Here is to hoping " Why you have so many cards" gets rescheduled, too. 

---

They have the same answer :

Because I can and want to.

Not the same thing as bragging rights