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Total Credit Limit versus Income ?

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Senior Contributor

Total Credit Limit versus Income ?

 

I found an old thread (2015) stating a 2:1 ratio.  Is that what we should be striving for in 2020?  Or does it even matter?

”MY TAKE HOME PAY DON’T TAKE ME HOME”
Message 1 of 54
53 REPLIES 53
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Moderator

Re: Total Credit Limit versus Income ?

Income is taken into consideration in two ways 

One is your total exposure with a single lender relative to your income, and your total credit lines relative to your income.

As far as what you're supposed to shoot for, that's really up to you

Shoot for the stars on cards you use, get some extra for utilization padding and dont worry about anything else. 

You will get approvals, denials,  CLIs based on various factors, income is just one piece of the puzzle. 

Dont worry about these things, they are just guesses

Some cannot get 10% of their income, others have total CLs that are many times over their yearly income

Focus on rewards your cards offer, minimize interest payments, and enjoy life 

Message 2 of 54
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Senior Contributor

Re: Total Credit Limit versus Income ?


@Remedios wrote:

 

they are just guesses

Okay, that makes more sense when reading here that ppl with lots of credit continue to get lots of credit even though they don't use a sizeable portion of their credit. ty

”MY TAKE HOME PAY DON’T TAKE ME HOME”
Message 3 of 54
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Moderator

Re: Total Credit Limit versus Income ?

Some lenders like Synch have known exposure ceilings, some tend to settle in particular range, and some simply follow their own secret sauce formula. 

 

I think often times denial reason for "too much available credit" doesnt really refer to sum of credit lines, or individual TLs, it's more or less "you ain't even using what you got, why give you more" unless it's one of CUs who loathe those with plenty of available credit

Cant say I blame them. 

Message 4 of 54
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Community Leader
Mega Contributor

Re: Total Credit Limit versus Income ?

Income always winsSmiley Wink. Id take income over a cl. I wont get into one should do this or that, whatever is right for you is right. Lenders wont let us use whole limits anyway but im still amazed at what ive achieved limit wise. I just need to find the nerve to say fico it let it all go and stay with 3 cardsSmiley Wink
Message 5 of 54
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Senior Contributor

Re: Total Credit Limit versus Income ?


@Remedios wrote:

 

Cant say I blame them. 


Yeah, I don't either.  

”MY TAKE HOME PAY DON’T TAKE ME HOME”
Message 6 of 54
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Regular Contributor

Re: Total Credit Limit versus Income ?

My personal preference is to have limits around 5 to 10 times routine pay-in-full spend. And to have it where I can throw an occasional big (for me) expense on there at 0% that can be comfortably paid by the end, and that not go above 30% of the card limit.

This lets me use accounts in a healthy manner and minimize score changes- because, to be honest, there's no change in fiscal health whether I put $1000 on a credit card or debit. Now there *might* be if I put $10,000 on it, or worse... :-x. I think that FICO is often too harsh in scoring low debts and sometimes too light for moderate to high debts, so this is my method to smooth out that system.

Like a lot of MyFicoers, it's become a bit of a game and I've gone over my own recommended minimum. I'm currently a bit over 2:1 for TCL:Income and I'm guessing it'll be closer to 3:1 at the end of the year even with non-aggressive soft-pull CLI and no new accounts.
Message 7 of 54
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Valued Contributor

Re: Total Credit Limit versus Income ?

It is nice to not worry about utilization.

It is also nice to not have all your eggs in the same basket or two.

It is a personal choice.

I never get new cards with an AF to increase my available credit.

I pay a total of $108 ($59+49) in AFs and my wife pays $95.

 

Rebuild started in 2014  -  $100k unsecured credit in 2017  -  $400k unsecured credit in 2020.

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Message 8 of 54
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Epic Contributor

Re: Total Credit Limit versus Income ?


@AverageJoesCredit wrote:
Income always winsSmiley Wink. Id take income over a cl. I wont get into one should do this or that, whatever is right for you is right. Lenders wont let us use whole limits anyway but im still amazed at what ive achieved limit wise. I just need to find the nerve to say fico it let it all go and stay with 3 cardsSmiley Wink

You have to get life coaching from @pinkandgrey on that!

 

Message 9 of 54
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Moderator

Re: Total Credit Limit versus Income ?

Well, in fairness, those cards were closed only because limits were found to be unacceptable, not for simplification.

Nothing wrong with three cards, though. I seldom use more than three in any given month.
Message 10 of 54
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