Risks of having a VERY high/unused total credit line?

[Anonymous]

Besides the obvious risk of not being fiscally responsible. It's been (and continues to be) my long term goal to reach and maintain an 800+ FICO, so I wanted to see if any of the more credit-experienced members of this forum had any insights to share. 

My brief credit background: I have two lines of installment debt: a PenFed auto loan, ~21K left w/0.74% interest, and a Federal student loan with ~9K outstanding. I have 6 credit cards/lines of revolving debt, of which 5 are primarily in my name. My total CL across these is a little over 100K, with my Marriott Rewards Premier Visa, Penfed AMEX, and (as of today's application and approval) AMEX Blue Sky cards each having over 20K limits. I never carry a CC balance and always pay on time, and my month-to-month personal CC spend tends to be under 1K on average. CK FICO estimate is consistently around 770, and a recent BoA CLI-request related mailing notified me of a 784 TU FICO. If it helps give any context to where I am in life, I graduated college within the last few years. 

With my long term 800+ goal, should I be worried about my total credit line? Would it hurt me to open up additional credit cards, say, 6 months from now, to take advantage of signing bonuses? I'm not planning to make any large purchases or take out any loans anytime in the foreseeable future, but I have my eyes on the CSP once I hit my 3-month Marriott Rewards Premier spend. I don't plan on closing any of the cards I currently hold, since only the Marriott carries an annual fee and I'm fine with the free annual night covering that cost, but with the CSP I'd probably take a churn mentality.

Apologies if this kind of specific question exists elsewhere, I didn't find anything with a few quick searches.

[Anonymous]

I wouldn't worry at all about having CLs that are "too high".  If anything, this situation will help you if you ever need to carry a balance, and effectively manage your utilization while doing so.

Of course, there is the temptation to spend more, and only you can answer that question.

Another pitfall is getting so many cards that you can't manage them without getting into trouble (late payments), or you take a score hit from inquiries, new tradelines, or reduced AAoA.  If you really want to get to 800 and stay there, I'd probably be quite selective in adding new credit.

[Anonymous]

Based on income or existing credit line for instance, is there some sort of rule of thumb for a total credit "ceiling" a given bank or issuer will give an individual across all lines of credit held with that bank/issuer? E.g. I already have one Chase card (Marriott Rewards), but if/when I apply for the CSP, will they adjust the credit line offered based on factors like how much credit I already have with them, or what my existing total credit line is, relative to income and such? I know nobody knows these formulas for sure, but I guess I'm trying to identify any clarity in the ambiguity.

To the overspending comment, that's of course a real issue. I get around that by anchoring my monthly spend to the salary direct deposits I see coming through my checking account, post retirement fund contributions and loan payments - "don't buy what you can't pay for with cash." My assumption with late payments is that setting up autopayments from a central account should keep me covered there. Could autopayments ever fail, short of ISF/NSF?

I understand the score impacts from credit inquiries and average age of credit lines (both from open accounts and closed accounts that get removed from the AAoA calculation after 10 years), but what are "new tradelines"?

[Anonymous]

Individual banks or CUs may have limits on how much credit they'll extend a given individual, for example $25K maximum.

It's possible for auto payments to fail.  I pay my CCs via bill pay, and always double check that the payment has been credited to my account.  With a lot of accounts, it's more likely that things can fall through the cracks.

New tradelines = new accounts, e.g. credit cards, installment loans, etc.

[thom02099]

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@Anonymous wrote:

Besides the obvious risk of not being fiscally responsible. It's been (and continues to be) my long term goal to reach and maintain an 800+ FICO, so I wanted to see if any of the more credit-experienced members of this forum had any insights to share. 

My brief credit background: I have two lines of installment debt: a PenFed auto loan, ~21K left w/0.74% interest, and a Federal student loan with ~9K outstanding. I have 6 credit cards/lines of revolving debt, of which 5 are primarily in my name. My total CL across these is a little over 100K, with my Marriott Rewards Premier Visa, Penfed AMEX, and (as of today's application and approval) AMEX Blue Sky cards each having over 20K limits. I never carry a CC balance and always pay on time, and my month-to-month personal CC spend tends to be under 1K on average. CK FICO estimate is consistently around 770, and a recent BoA CLI-request related mailing notified me of a 784 TU FICO. If it helps give any context to where I am in life, I graduated college within the last few years. 

With my long term 800+ goal, should I be worried about my total credit line? Would it hurt me to open up additional credit cards, say, 6 months from now, to take advantage of signing bonuses? I'm not planning to make any large purchases or take out any loans anytime in the foreseeable future, but I have my eyes on the CSP once I hit my 3-month Marriott Rewards Premier spend. I don't plan on closing any of the cards I currently hold, since only the Marriott carries an annual fee and I'm fine with the free annual night covering that cost, but with the CSP I'd probably take a churn mentality.

Apologies if this kind of specific question exists elsewhere, I didn't find anything with a few quick searches.

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Not clear how your title and this equate???  Are you saying for yourself the temptation is there to not be fiscally responsible?  Or a general statement that having a high total credit limit equals being fiscally irresponsible. 

Many folks here have very high total credit limits (hundreds of thousands) and are very fiscally responsible.  That's one of the things that many of us have learned here, how to GET those high limits, and how to KEEP those limits, while keeping spending under control...fiscal responsibility. 

[Anonymous]

No no, I was saying neither of those things. The idea was "besides the high potential for abuse and the possibility of getting stuck with severe debt when one has a high credit line and spends irresponsibly, what other risks are there to having a high credit line?". I don't blame you for not seeing it embedded in my lengthy post, but my credit utilization is something on the order of 1-2% in a given month - I'm well aware that getting a high credit limit and maintaining it involves spending wisely, aka fiscally responsibly.

[thom02099]

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@Anonymous wrote:

No no, I was saying neither of those things. The idea was "besides the high potential for abuse and the possibility of getting stuck with severe debt when one has a high credit line and spends irresponsibly, what other risks are there to having a high credit line?". I don't blame you for not seeing it embedded in my lengthy post, but my credit utilization is something on the order of 1-2% in a given month - I'm well aware that getting a high credit limit and maintaining it involves spending wisely, aka fiscally responsibly.

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Thanks for the clarification !   I did see your util statement, that's why I was a bit confused, with the title, that first sentence, and THEN the body of your post. 

[takeshi74]

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@Anonymous wrote:

With my long term 800+ goal, should I be worried about my total credit line? Would it hurt me to open up additional credit cards, say, 6 months from now, to take advantage of signing bonuses?

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As always, consider the factors that go into scoring:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

You'll drop your AAoA (you can do the math to see by how much) and take on some inquiries by apping.  The effect will all depend on your credit.  A thicker credit profile in general can handle such things without much trouble but a thinner profile will see more of an impact.  However, with more available credit your utilization will improve.

What are you looking to acheieve with an 800+ score?  Best terms are usually granted at 750+ (though it's not always just about the score[s]).  800+ would give you a bit of margin.

How have you determined that your credit limits are "VERY high"?

[Anonymous]

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@takeshi74 wrote:

What are you looking to acheieve with an 800+ score?  Best terms are usually granted at 750+ (though it's not always just about the score[s]).  800+ would give you a bit of margin.

How have you determined that your credit limits are "VERY high"?

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If anything, it's a game. Part of it also is the peace of mind of knowing I should (at least in theory) qualify for the best possible rates on any future loans. Case in point, my brief but relatively maintained credit history got me a PenFed auto loan that saved me hundreds over what the dealer's offer. 800+ is just a goal, although I recognize though there's obviously no tangible reward or benefit over a 790.

Perhaps I'm not in the company of as fiscally- and credit- minded people, but when my peers and co-workers (again, recent college grads) are all looking at total credit lines of $10K-$20K, it leads me to believe that my CL is fairly high. I don't think it's "very high" in the absolute sense, but I mean that relatively - I'm sure when it comes to credit algorithms, my age of credit (and by proxy my age) is taken into account one way or another. Again, I'm just trying to elicit and understand any potential red flags that a creditor might see.