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I can't seem to find any info on this. On my credit report it says that a negative thing reflecting on my score is that "one or more of your credit cards have a low limit" What is a low limit? Under $1,000? Under $500? Under $200, Under $2500? Help! If I have a low limit card (I have one that I know for sure is a low limit) would it be better to close it then to keep it active? This card with a low limit and I've paid perfectly on it for years and years and they refuse to up my limit, trying to decide how to handle the card. Thanks for any help!!
Hi, welcome to the forums!
There is no negative for FICO scoring for a low CL. I suspect that you're not looking at a FICO score report, but what we call a FAKO score report.
While it appears that having lots of low-CL cards might make it hard to get a higher-CL card, that's just lender reluctance.
But you can have a dozen low-CL cards and fine FICO scores. It's a little harder to control util, but that's the only issue.
To piggyback off Hauling, when I first came to these forums, I also received the same advice that low limit CCs were bad. I realized real quick that the advice was bad and that if you compare 2 people with identical reports with same utilization, and with everything being exactly equal, the person with low CLs (<$1000) would have the same score as someone who had $100k+ in TLs. I recall one post of someone who had a super long credit history. She only had 3-4 CCs, all with CLs $300-$400 and less, and had just over $1000 in total credit lines. Her scores were hovering around 825-830 with only a couple dollars in balances. It's not the CLs, but it's how you use them that counts.
I'll piggyback off both hauling and llecs - when it comes to CL, size doesn't matter, bigger's not better.
Take the opportunity to pull at least one of your FICO scores here. You'll not only receive a real FICO score, you'll also receive info on what's helping your FICO and what's hurting your FICO. You'll also have access to the FICO score simulator, which will tell you what you can do to improve your score. This will help you know what will really allow you to impact your score.
Ignore all FAKO scores - and especially the FAKO advice that accompanies them. Following that advice can, and will, damage your FICO score and your credit rating.
I am triple piggybacking!
That comment would only be relevant if it said that your % util of your CL on that card was too high.
As has been said, FICO does not score CLs. High CL on a card is secondarily important.but more important is in your overall % util, not your indiv card util
Your overall % util, using simple math, ALWAYS counts for at least TWICE as much as % util on any one single card
Concentrate on your oerall % util for general improvement on FICO scoring. Indiv card% util is secondary.
Piggybacking some more here. Just wanted to add a small caveat: while history and util have the most to do with your score... If all you have are CC's reporting - Low limits can affect the decision on financing if you don't have any loans that have been closed. Low limits = only small loans.
Good point, introvert!
I know that we all have an obsessive focus on FICO scores, but creditors make their own decisions, not limited to a three digid FICO number!
They do manual pulls of a consumer CR, and then all accounts, regardless of FICO "equality," my be viewed very differently by the prospective creditor.
Seeing the same % util on a $30,000 CL card vs a $500 CL card is certainly not the same Much different debt.
@Anonymous wrote:Piggybacking some more here. Just wanted to add a small caveat: while history and util have the most to do with your score... If all you have are CC's reporting - Low limits can affect the decision on financing if you don't have any loans that have been closed. Low limits = only small loans.
Perhaps. Sometimes. It very much depends on the lender and the nature of the loan.
@Anonymous wrote:
@Anonymous wrote:Piggybacking some more here. Just wanted to add a small caveat: while history and util have the most to do with your score... If all you have are CC's reporting - Low limits can affect the decision on financing if you don't have any loans that have been closed. Low limits = only small loans.
Perhaps. Sometimes. It very much depends on the lender and the nature of the loan.
As in mortages and autoloans focus on DTI, I don't think low limit CCs are a factor at all.
Also, I would trade a 10k bank Viisa/MC card for 3k store card at 0% for 3 years any day of the year.