What is the purpose of having a high CL when u never use it?

[Fico2Go]

Has anyone ever used up most or all of thier $5k+ CL? 

Everyone seems to be pushing for CL increases but how likely are you to use it?  Are high CLs meaningless illusions?  I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs.  But will you ever get a chance to use it? 

I pose this question beause many members seem to have the following characteristics:

1:  To maintain low DTI most only charge 10% or less of their available credit lines.  So a 10K CL will get used $1000;

2:  There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing;

3:  As TLs usage increases creditors could decrease limits;

4:  Inactive TLs are now getting closed.

Some people shows multiple cards with high limits and yet they use only $500 a month.  Where then is the value of having high CLs?  Thanks for shedding some light... 

[indiolatino61]

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@Fico2Go wrote:

Has anyone ever used up most or all of thier $5k+ CL? 

Everyone seems to be pushing for CL increases but how likely are you to use it?  Are high CLs meaningless illusions?  I'm sure there are many here like myself that are positioning their CRs for the highest approval amount and in many cases banking on high CLs to get even higher CLs.  But will you ever get a chance to use it? 

I pose this question beause many members seem to have the following characteristics:

1:  To maintain low DTI most only charge 10% or less of their available credit lines.  So a 10K CL will get used $1000;

2:  There is possibility ( with increasing speed of technology and scores ) that creditors will know almost instantaneously when account balances are increasing;

3:  As TLs usage increases creditors could decrease limits;

Some people shows multiple cards with high limits and yet they use only $500 a month.  Where then is the value of having high CLs?  Thanks for shedding some light... 

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It helps with your utilization percentage. Using $1,000 on a card that has a CL of $1,500 is far worse, credit scoring-wise, than using the same amount on a CL of $10,000. Plus, presumably higher CL attract higher limits from other lenders. Chase, for example, likes to see experience with $5K limits before approving the CSP. This varies, of course, but most people have posted this is often the case.

[Swapmeet]

Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.

[myjourney]

In case of emergency 

Better to have than to have not

[Fico2Go]

Hi IndioLatino.. cool name. 

I understand what you mean by using High CL to lower DTC ratios.  So let's assume you have five accounts with $5K each CL.  Total available CL is 25K. 

To keep the ratios low you can use only $2500.  

There must be a better way. since there's 22.5K in wasted credit.  

[Fico2Go]

My Journey...  I bet the credit companies know this all too well.  They know that even if they grant CLs of $50K the accountholder will use no more than $10K. 

And if that person uses more than 10K a domino effect begins to take hold.

AA for possible account closure;

Other creditors following suit;

interest rate goes up;

Seems all our hardwork to RECON and request for CLIs may not be all that useful if in fact we can't or wont be allowed to effectively use the it.  

Shall I say a glass ceiling effect is in place? 

[indiolatino61]

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@Fico2Go wrote:

Hi IndioLatino.. cool name. 

I understand what you mean by using High CL to lower DTC ratios.  So let's assume you have five accounts with $5K each CL.  Total available CL is 25K. 

To keep the ratios low you can use only $2500.  

There must be a better way. since there's 22.5K in wasted credit.  

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Thank you for the compliment...lol. All this talk with percentages and the like only matter if you are going to app for more credit, as you want to maximize your credit scores prior to the app. The general "rule" for max FICO scoring is to have all of your cards report a zero balance (pay them all in full before the closing date) and let only one card report 1-9% and then PIF before the due date. Otherwise, there is not much benefit to micro-manage balances and dates. In your example, four cards would report $0 and the fifth card would report $50-$450. Contrary to what I had thought for many years, having all cards report $0 actually lowers scoring...it is best to show a balance on one card. Always PIF before the due date to avoid interest payments if at all possible.

[CreditScholar]

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@Swapmeet wrote:

Thigh higher your limits are, the more debt that you can carry while keeping it at <10% utilization.

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+1. It really depends on your lifestyle and spending habits, but for some the answer is definitely yes.

I just charged $1400 for dinner a few hours ago, so blowing through 5k is very easy. If my CLs were lower, I'd have very high util all the time. At that point my score would tank so for me yes, having higher CLs helps.

[toppers555]

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@Fico2Go wrote:

Hi IndioLatino.. cool name. 

I understand what you mean by using High CL to lower DTC ratios.  So let's assume you have five accounts with $5K each CL.  Total available CL is 25K. 

To keep the ratios low you can use only $2500.  

There must be a better way. since there's 22.5K in wasted credit.  

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The 10% is for optimial points.  Additional it shows you are capable and financially responsible. 

[Fico2Go]

If PIF is the case and objective in most cases then it's not much different from having say a PayPal debit card that pays 1.5% cashback.  Only with credit cards u have almost two months float in some cases.   Unfortunately the bottom line is you can't use most of your approve CL if u are always PIFing.