Understanding available credit impact on lending

[Anonymous]

So when I was younger I was taught that too many credit cards were a bad thing and given this reasoning:  If you ever want a loan from a bank and they see you have a ton of available credit they might get worried, like if something bad were to happen you get get yourself in way too deep if that makes sense. My question is, does that actual hold true for lenders?  Here is what I currently have

Amex BCP- $24k

Barclay Arrival+ -$5k

Quicksilver- $7k

Best Buy Card- $7.5k

Slate- $2k

Victorias Secret- $1k

Lowes- $5k

Sony- $750

So if I were to apply for a mortgage or car loan right now would this impact me negatively? If I were to app for a couple more cards or get CLI's on my current cards would that hurt me? 

My utilization is betwee 0-10% each month, I only don't PIF if I have a 0% interest offer.  I have a 2 30 day late and one 60 day late that are 5+ years old and that is it, TU FICO is 731.  This is all hypothetical BTW, I have a mortgage and will not be looking for any new installment loans anytime soon but if I were to be interested in obtaining a new CC in the future I am just curious if the bank is going to say HOLY CRAP this guy has access to $100K worth of credit cards that's too risky or if the only thing that really matters is my ability to manage them.  Thanks

[CH-7-Mission-Accomplished]

Having a lot of available credit won't affect a car loan or a mortgage loan (if utilization is low), but it will scare off some credit card lenders from giving you new cards or CLI's.

[Gunnar419]

SOME mortgage LOs may tell you you need to close cards, but they are in the minority and are often simply showing their own ignorance.

As you suspect, your ability to MANAGE the credit you have is a far bigger factor than how much available credit you've got.

[pipeguy]

IMO, your file looks healthy - no idea what you utilization is, but it looks like a diverse group of not too many revolvers - I'm not a loan officer, but as far as a mortgage I'd say you are good.

[takeshi74]

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@Anonymous wrote:

So when I was younger I was taught that too many credit cards were a bad thing and given this reasoning:  If you ever want a loan from a bank and they see you have a ton of available credit they might get worried, like if something bad were to happen you get get yourself in way too deep if that makes sense. My question is, does that actual hold true for lenders?

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Every creditor has a limit on what they're willing to extend for any given credit profile so, yes there is a limit.  The limit, however is not based on number of cards (see any of the countless prior "number of cards" threads).  That said, creditors vary in how much they're willing to extend to any given credit profile.  Never assume that all creditors are identical on such matters.

It's not as much of an issue with secured installments such as mortgages and auto loans as they are considered differently than revolvers and unsecured credit IIRC.

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@Anonymous wrote:

So if I were to apply for a mortgage or car loan right now would this impact me negatively? If I were to app for a couple more cards or get CLI's on my current cards would that hurt me?

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It's impossible to say based solely on your limits.  With credit it's never just about one single factor.  IMO it's really not worth worrying about unless a creditor you're applying to cites it as a denial reason.  As stated above, some mortgage lenders may show some concern.  You can either pick another lender or close out tradelines to comply.

We can't tell you your approval odds.  However, new accounts and CLI's typically come with hard pulls.  New accounts reduce AAoA.  The impact is never just about the action itself but how that action factors into one's existing credit.  One person could "app for a couple more cards or get CLI's" with no problem.  The next could run into problems.  Everyone's credit isn't identical.

Keep this in mind:

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

If you want something to worry about then see if you can do anything about those derogs.  Hit the Rebuilding subforum. 

[Zorasmiles]

Old school of thought with a few creditors carrying it over.  As long as you're managing your credit responsibility, have adequate time at the current limits and aren't in any financial trouble there really shouldn't be an issue.  Some credit card companies shy away from it, perhaps thinking you're overexposed and have met their internal limits, some loan officers think that it look bad but as others say they are the minority...

[Anonymous]

Ok i actually searched for this topic cause i do work for a bank! (Can't disclose) ... true we do look at too much available credit as sort of a bad thing ...not necessarily bad but it becomes a factor of your overall exposure to lend you any additional debt. We understand you have a 50k card with no balance however banks also understand you have the ABILITY to go run that up tomorrow so they do use the available credit as a type of risk factor

[Anonymous]

I did mortgages for 3 years and never heard once anything about how much credit anyone had available. The underwriters care aboout what your middle score is, how much money you make, and what assets you have. I can't speak on any other type of lending but how much credit you have available means absolutely nothing when it comes to a mortgage from my experience. There are no "credit limit qualifications" that I am aware of. If anything it should be looked at as a positive, not a negative. If you get on a jam with the mortgage you have a ton of available credit to fall back on.

[RobertEG]

Yes, large credit limits could be viewed as the potential to go into debt up to that amount without further need for approvals and review, but the flip side is also true.

Your current creditors, in setting those credit limits, have presumably based them on an assessment that you have the ability to incur debt up to that level.

High credit limits can be viewed as an assessment of low risk of default on a substantial chunk of discretionary credit.

[Anonymous]

I do business loans and they DO factor your available "exposure" into your debt to income ratio for your global cash flow ability ... Im just saying with real lending ... not credit cards or mortgages