cancel
Showing results for 
Search instead for 
Did you mean: 

value of having high credit limits and other reasons

Anonymous
Not applicable

Re: value of having high credit limits and other reasons

I think most people typically don't carry more than a few thousand dollars of CC debt.  Sure there are outliers that do, or those that run into spending issues or lack of payment issues but I'm just making a generalization.  That said, someone with say $5k in CC debt whether they have $60k in total credit limits or $200k in total credit limits is still going to have single-digit aggregate utilization.  The person with $200k in credit limits verses the person with $60k in credit limits won't achieve any better of a score, all other things being equal, as their utilization percentages will both yield the best scoring scenario FICO wise.

Message 11 of 24
Chickenpotpie
Frequent Contributor

Re: value of having high credit limits and other reasons

Yes, my higher income does get me higher limits.  I'm also (after having dealt with a bankrupcy) a hell of a lot more responsible and wiser. the bankrupcy was hellish. That time period taught me a lot, all in good ways! I'm more cautious and frugal. In the meantime went back to school, ended up with a higher income.  I work a ton mind you but I'm decently compensated for it.

 

I live well within my means, but if an emercency cropped up I would have enough in cards to cover + savings.

 

Many of my cards were either really great starting limits, or, a great starting limits + organic CLI  Amex is one i asked for a pretty big raise and they granted that.  I don't see myself going higher but its all about what the future brings Smiley Happy  FWIW, I have a small stable, only 4 cards + paypal credit tradeline.  More than that and it would be very hard for me to handle.

Message 12 of 24
longtimelurker
Mega Contributor

Re: value of having high credit limits and other reasons


@TheVig wrote:
Higher limits, beget higher limits.

While that is far from always true, it's  also a bit circular for this discussion, "Why have high limits?"  "Oh, so you can get more and higher limits..."   Compare "Why do you encourage mice in your house?"  "Oh, they breed so I get a lot more mice."

Message 13 of 24
OzMan1788
Established Contributor

Re: value of having high credit limits and other reasons


@fritscher wrote:

Hi

i am relatively new here..I do see that many people like to keep increasing their credit limits on their cards..I am wanted to do that too but i know I would never use those high limits..Is the reason why to have low util for the most part or do many of you actually charge 15000 a month and pay off?  also in order to get about 15000 do you have to have very high income.? just some thoughs..I have the urge to do cli on my current cards just to see if that will make my credit scores go up more etc

thank you for feedback


It comes down to utilisation.  Util is the second most important factor in your credit score, behind only on-time payments.  Any anything over 10% will affect your score.  

 

So, in your example of having $15,000 in availabe credit, if you have more than $1500 reporting (not even carrying a balance, you can spend $1501 in a month, pay it all off, and still have your credit drop), it affects your score negatively.

 

And you should easily be able to get at least double your income in total ciredit lines.  I am approaching 3 times my reported income.

 

Message 14 of 24
JellyBeanGurl111
Frequent Contributor

Re: value of having high credit limits and other reasons

I have a lot of cards. That's because I love to have options when it comes to using them.
I have high limits. One card has about 30k CL on it. And sits at a zero balance. I have another card with 23k CL; no balance. And numerous other ones.

I have found that having a higher CL for me allows me to have higher CL on my new cards too. I just got a personal credit line for 15k at a credit union and it was easy to get.
We don't carry balances on our card and pay them off. We don't carry debt.
It's nice to have options when you need it. When I had to purchase some brakes and rotors for my Audi, I was able to put it on one of AmEx card with zero interest for the first 15 months without dipping into my savings, investments or checking.
Things like that makes life a little easier for me. Having options is important to me.
Message 15 of 24
WaveRider
Established Contributor

Re: value of having high credit limits and other reasons

Utilization freedom pretty much.  Sometimes people pay in full and sometimes people want to be able make large spending at times spread out over time without it affecting their score.

Message 16 of 24
Gollum
Frequent Contributor

Re: value of having high credit limits and other reasons


@fritscher wrote:

Hi

i am relatively new here..I do see that many people like to keep increasing their credit limits on their cards..I am wanted to do that too but i know I would never use those high limits..Is the reason why to have low util for the most part or do many of you actually charge 15000 a month and pay off?  also in order to get about 15000 do you have to have very high income.? just some thoughs..I have the urge to do cli on my current cards just to see if that will make my credit scores go up more etc

thank you for feedback


I think most people seek a credit limit increase because a credit limit increase can be requested/granted relatively easily, and a credit limit increase gives immediate gratification to those who are trying to improve their credit.  Utilization percentages are the reason/excuse.  Disregarding those with lousy credit scores in the sub-prime market, a credit limit increase from a particular bank is a mostly illusory "gain" because that particular bank can decrease the credit limit at least as fast as it increased it.

To a borrower, it's a paradox: the less "need" a person has for a credit limit increase, the more likely it is that person will be given a credit limit increase.

To a lender, it makes sense.

Credit Scores: (FICO 8) 848 Experian August 2021, 847 TransUnion August 2021 | (FICO 9) 850 Equifax September 2021
Credit Cards (newest to oldest): NFCU VISA Platinum $25,000 | BECU Cash Back VISA $10,000 | American Express BCE $3000 | Simmons Bank VISA Platinum $7500 | Capital One No Hassle Rewards VISA Platinum $500
Message 17 of 24
fritscher
Regular Contributor

Re: value of having high credit limits and other reasons

thank you all (so many of you) for your responses..I appreciate it alot..You answered my question.

Message 18 of 24
fordguy89
Valued Contributor

Re: value of having high credit limits and other reasons

15000 is red line on sportbikes. It can go there but its not happy there for forever. Old people (banks) don't like the sound of it either.

If you have a 15k limit you should use no more than 5k to 6k of it if you can't pay down by the next month. From a scoring only standpoint. Going higher dings score and potentially lenders relationship.
Open one, close three. Open one, close three.
Message 19 of 24
TheVig
Regular Contributor

Re: value of having high credit limits and other reasons

I don't have a lot of Comenity cards so I can't relate to mice. Like others have said it's all about utilization padding.

@longtimelurker wrote:

@TheVig wrote:
Higher limits, beget higher limits.

While that is far from always true, it's  also a bit circular for this discussion, "Why have high limits?"  "Oh, so you can get more and higher limits..."   Compare "Why do you encourage mice in your house?"  "Oh, they breed so I get a lot more mice."


Message 20 of 24
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.