Utilization Ratio

[Anonymous]

I read it's best to keep utilization ratio below <30% or even <10% on all my credit cards. Given that, I imagine it's to my advantage to get as high of a credit limit as possible. I'm a high income earner with excellent credit score (Credit Karma shows: Equifax 783 and Transunion 773, and Discover shows: FICO 775)

Recently CHASE offer to transfer my credit limit from one card to a new one I want to open because I already have such high credit limit on my other cards. So that got me thinking... is there a limit to how much credit spread among all credit cards a bank is willing to give one individual?

With CHASE, my CL are:

CHASE Sapphire Preferred $28k

CHASE Unlimited $14k

CHASE Freedom $25k

Adding other banks into the mix, I have about $90k in credit limit.

Is there statistic linking credit limit to income ratio? For example, is having credit upwards to $100k consider high, average, or it just depends on one's income?

I don't plan to shop for car loan, mortgage, or borrow money in the near future.

Is there any caveat I should be aware if I'm applying for new credit cards for bonuses on a regular basis? I already know about CHASE's unofficial 5/24 rules. Is there any other rules out there?

[sarge12]

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@Anonymous wrote:

I read it's best to keep utilization ratio below <30% or even <10% on all my credit cards. Given that, I imagine it's to my advantage to get as high of a credit limit as possible. I'm a high income earner with excellent credit score (Credit Karma shows: Equifax 783 and Transunion 773, and Discover shows: FICO 775)

Recently CHASE offer to transfer my credit limit from one card to a new one I want to open because I already have such high credit limit on my other cards. So that got me thinking... is there a limit to how much credit spread among all credit cards a bank is willing to give one individual?

With CHASE, my CL are:

CHASE Sapphire Preferred $28k

CHASE Unlimited $14k

CHASE Freedom $25k

Adding other banks into the mix, I have about $90k in credit limit.

Is there statistic linking credit limit to income ratio? For example, is having credit upwards to $100k consider high, average, or it just depends on one's income?

I don't plan to shop for car loan, mortgage, or borrow money in the near future.

Is there any caveat I should be aware if I'm applying for new credit cards for bonuses on a regular basis? I already know about CHASE's unofficial 5/24 rules. Is there any other rules out there?

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First of all, the generally accepted opinion is that utilization is used for both overall, and each individual card. It has a high, but very temporary affect on score. So if your util is at 80% one month causing a drop to your score of say 80 points, then the next month your util. is <3%, you would get back every one of those 80 points. So actually the only time a real low util. is important is shortly before applying for credit. Inquiries in comparison, have a small affect on your score, but it is a decreasing effect for 1 year. Now the generally accepted opinion is you should have less than 10% overall util. <30% on any single card, however even lower util. would be even better. Most are of the opinion that you should have 1 card with small balance, and all others at 0 before applying for anything that requires a high score. Just remember you are not penalized this month for having high utilization last month. You need to know when each card reports to CR or just pay well before statement cuts to get maximum points for util. when the lender pulls the report.

[takeshi74]

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@Anonymous wrote:

is there a limit to how much credit spread among all credit cards a bank is willing to give one individual?

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Of course.  No creditor is going to grant infinite credit.  How much is willing to be extended can vary from creditor to creditor for a given credit profile and some creditors may have a max exposure.  USAA, for example, will only grant $50K on all credit cards.

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@Anonymous wrote:

Is there statistic linking credit limit to income ratio?

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They're not directly linked like that. Both credit profile and income are the primary considerations for that.

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@Anonymous wrote:

Is there any caveat I should be aware if I'm applying for new credit cards for bonuses on a regular basis? I already know about CHASE's unofficial 5/24 rules. Is there any other rules out there?

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You need to be aware of the usual impacts -- not just creditor policies like 5/24.  You need to read the terms for any bonus offer you're interested in.

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@Anonymous wrote:

Credit Karma shows: Equifax 783 and Transunion 773, and Discover shows: FICO 775

Always consider the specific scoring model & CRA.  Also consider the relevance of the model/CRA combo.  CK's EQ and TU VantageScore 3.0's are only relevant to creditors that use them in their decisions.  Discover's score (if you have a card) is only relevant to creditors that use a TU FICO 8 in their decision.

[sarge12]

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@takeshi74 wrote:

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@Anonymous wrote:

is there a limit to how much credit spread among all credit cards a bank is willing to give one individual?

---

Of course.  No creditor is going to grant infinite credit.  How much is willing to be extended can vary from creditor to creditor for a given credit profile and some creditors may have a max exposure.  USAA, for example, will only grant $50K on all credit cards.

---

@Anonymous wrote:

Is there statistic linking credit limit to income ratio?

---

They're not directly linked like that. Both credit profile and income are the primary considerations for that.

---

@Anonymous wrote:

Is there any caveat I should be aware if I'm applying for new credit cards for bonuses on a regular basis? I already know about CHASE's unofficial 5/24 rules. Is there any other rules out there?

---

You need to be aware of the usual impacts -- not just creditor policies like 5/24.  You need to read the terms for any bonus offer you're interested in.

---

@Anonymous wrote:

Credit Karma shows: Equifax 783 and Transunion 773, and Discover shows: FICO 775

Always consider the specific scoring model & CRA.  Also consider the relevance of the model/CRA combo.  CK's EQ and TU VantageScore 3.0's are only relevant to creditors that use them in their decisions.  Discover's score (if you have a card) is only relevant to creditors that use a TU FICO 8 in their decision.

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Just out of curiosity do you know any lender at all who actually uses the vantage 3.0 score, I have never heard of any lender uses it. Until I do, this remains as what others call a Fako score. It may be available for use by lenders, but if none do, it is useful only to monitor trajectory. CreditKarma has been one of the best sites for notifying me of changes to my credit however, and it is free.

[Anonymous]

Only thing I can add is that utilization can also be dependent on your credit profiles. After testing the real world credit bureaus for two years, my best score point is about 1% and as has been stated paying to zero dropped my scores. As to a relationship of income to credit limits lenders have risk assessment models that establish the maximum they are willing to allow (it may vary by card product and as a whole).

[Anonymous]

Thanks for all the replies! Any tips on getting to the 800s club? All my scores are hovering around 780s but just can't seem to push past the 800s.

I do have a high student loan balance of ~$100k but paying it down aggressively ($45k/yr). Other than that, my utilization ratio is usually around 10%. I pay off my card balances monthly and mostly use CC to maximize my CHASE Ultimate Rewards points. 

[Anonymous]

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@Anonymous wrote:

Thanks for all the replies! Any tips on getting to the 800s club? All my scores are hovering around 780s but just can't seem to push past the 800s.

I do have a high student loan balance of ~$100k but paying it down aggressively ($45k/yr). Other than that, my utilization ratio is usually around 10%. I pay off my card balances monthly and mostly use CC to maximize my CHASE Ultimate Rewards points. 

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In looking at my credit profile and utilization ... my most effective factor for score movement was redcuing the amount of outstanding debt (paying down). This can vary based on your credit profile but for me this is the one big factor for score improvement.

[sarge12]

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@Anonymous wrote:

Thanks for all the replies! Any tips on getting to the 800s club? All my scores are hovering around 780s but just can't seem to push past the 800s.

I do have a high student loan balance of ~$100k but paying it down aggressively ($45k/yr). Other than that, my utilization ratio is usually around 10%. I pay off my card balances monthly and mostly use CC to maximize my CHASE Ultimate Rewards points. 

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Getting that util below 3% with only one card reporting balance will probably get you there. Your score will go right back down once your utilization goes back up though. No one sends you an award for reaching the 800 club by the way. I still for some reason want to see 850 across the board though...bet I recieve no award then either.

[Anonymous]

I know there's no reward. I guess seeing the score is a reward in itself for me. Thanks!

[Anonymous]

Keep your overall util 1-2% and you'll be happy