What's the purpose of having high CL if you never use it?

[acercode]

I often see people with $100k+ credit lines and wondering what's the reason for it. I mean they never use them all and if they do, their accounts get shutdown or severedly reduced. So what's the purpose of it, is it just in case of an emergency or is it just part of the credit/FICO game?

[CreditMarathoner]

I often ask the same question.  I think it depends on the individual, but in many cases it's either for ego/bragging rights or to pad utilization to maximize scores even when their regular spend balances report.

I think this forum adds a "peer pressure" aspect as well... everyone is always seeking more... more credit, higher limits, more more more!  Even if they don't really need it or even use it.  The existence of soft-pull online increase requests makes it even easier... just click the button to spin the wheel of fortune and see what comes up.

If you look at my sig I'm a bit of an outlier here, only 4 cards and a 23K total credit limit (TCL).  Tiny compared to many here, but it's more than I ever had before I joined here.  For several years my TCL was $5k or less, and it was never over $20k until just recently.  I just don't feel the need since I rarely spend more than $2k/month and I don't carry balances.

In fact, years ago I used to request CLDs on my cards because I felt the limits were too high relative to my spend.

[Jnbmom]

I really don't believe that most use this for "ego or bragging rights". I have very high limits across several banks with utilization at 2%, but I could put some balances on them and still remain low utilization so that's my main reason, and if I did have a major emergency it wouldn't kill my utilization and tank my score then suffer the domino effect  . I don't have a signature with all my cards and this is just MY opinion I hate that feature lol, but I don't believe most people here have high limits to "brag"

[Creditwiser]

---

@Jnbmom wrote:

I really don't believe that most use this for "ego or bragging rights". I have very high limits across several banks with utilization at 2%, but I could put some balances on them and still remain low utilization so that's my main reason, and if I did have a major emergency it wouldn't kill my utilization and tank my score then suffer the domino effect  . I don't have a signature with all my cards and this is just MY opinion I hate that feature lol, but I don't believe most people here have high limits to "brag"

Ditto !

---

[Rogue46]

Most of my life i never had a decent credit score and after filing bk7 back In 2014 I got serious about achieving a good credit score which is how I ended up here. Now it's kind of a fun hobby for me trying to see how high I can get the limits on cards and learning about everything credit related. It's a rush going for a CLI and seeing what you can get. Admittedly I don't use anywhere near the credit lines I have but it's comforting knowing if I have an emergency it's there for me to use.

[Horseshoez]

---

@acercode wrote:

I often see people with $100k+ credit lines and wondering what's the reason for it. I mean they never use them all and if they do, their accounts get shutdown or severedly reduced. So what's the purpose of it, is it just in case of an emergency or is it just part of the credit/FICO game?

---

Not long after I joined myFICO I asked pretty much the same question and followed it up with a question correlating such high limits with bragging rights.  I instantly had my post deleted and was threatened with a temporary ban for any future infractions (and was subsequently banned twice).

In the three or so years since I joined I've come to the conclusion there are several reasons for hitting what I'll call the "Century Club":

1. Individuals wanting high card counts who continuously apply for new cards on a regular basis; in this case the $100,000 limit might essentially be a knock-on effect.
2. Individuals who ask for a CLI at every opportunity on existing cards along with applying for new cards to reach whatever high limit goal they are shooting for.
3. Individuals who have a genuine need for such high limits as they move a lot of money through their cards on a regular basis, typically for business purposes.
4. Individuals who maintain the cards which best serve them and ultimately hit the Century Club organically via auto-CLIs.
5. Individuals who will ultimately join the folks in the above line if for no other reason than their cards continue to grow over time.

I figure I am pretty square in the Point 5 (above) camp; as with several folks around here, I currently have a few cards (five to be exact) and about $40,000 in TCL (compared to $0.00 three years ago); I use four of those cards on a regular basis and don't currently have a need for more cards or higher limits (my monthly reported balances are typically less than $100 even though usually run about $5,000 through my cards in any given month).  I only have one card currently in my sights, a United Club card, and will pull the trigger only if I start traveling for work again; regardless of whether I add more cards or not, I figure sooner or later I will bump up into the Point 4 camp even though I have no need/want/desire to join the Century Club.

[markbeiser]

My goal reason for having 15-20k limits on the cards I use is so I can set up automatic payments to pay statement balances by the due date, while also maintaining very low utilization.
Currently I have to make payments before statement cuts to do so.

The nice thing about being able to let balances pass through a statement cut is that it is easier to arrange due dates so everything can be paid on on the same day, and aligned with when my mortgage and car payments are due.
This will help me pay down my HELOC balance faster because I can apply 100% of my paycheck income to the HELOC, and take a draw from my HELOC once a month to pay all of my bills.
Unfortunately I can't entirely automate the process, because Texas law requires a minimum draw of $4k from a heloc, but at least I can get it down to only having to deal with it once a month.

A couple of big 0% balance transfere cards would be nice for parking some of the balance of the HELOC into interest free for 12+ months too.

[Thomas_Thumb]

---

@acercode wrote:

I often see people with $100k+ credit lines and wondering what's the reason for it. I mean they never use them all and if they do, their accounts get shutdown or severedly reduced. So what's the purpose of it, is it just in case of an emergency or is it just part of the credit/FICO game?

---

Having higher aggregate and single card credit limits allows me to conduct business as usual without fear of Fico score penalties. What is business as usual? It means ability to put charges on cards, getting statements and then paying balances in full by due date - without resorting to payment tactics such as AZEO.

I have practiced statement PIF for nearly 40 years. If someone makes early payments to report low balances before PIF is that financially superior to a simpler "allow charges to report and then PIF"? No - in either case the same amount of charges are made and then paid before due date.

How do those of us who prefer the simple life avoid Fico utilization penalties? - by having high enough CLs on individual cards and in aggregate to maintain low utilization while allowing normal monthly charges report on statements.

For me this was achievable when aggregate CL reached around 1x gross income. The 2nd part of this objective was to have a few moderately high limit cards as opposed to a dozen or more lower limit cards. The higher limit cards can help avoid elevated card utilizations.

Do higher CLs put a person at risk of account closure or CLDs? - NO. Do they mean a person is mismanaging their credit - NO. Do they provide the user some payment flexibility - Yes.

The guideline I use to avoid utilization penalities is to maintain aggregate utilization under 9% and under 29% on individual cards.

Lets say a person has a $120k annual salary and puts $5k on cards monthly. Assume all charges report as balances on monthly statements.

Case 1: the person has two cards at $10k CL and three at $30k CL cards. Total CLs $110k

Case 2: the person has six cards; two at $2k and four at $4k. Total CL is $20k.

In case (1) aggregate utilization is $5k/$110k = 4.5%. (Below 9%). If a single $30k card had all charges then card UT is $5k/$30k = 16.7%. (Below 29%). The only potential penalty of significance would be all charges on a $10k card => 50% card UT.

In case 2 aggregate UT with all charges reporting is $5k/$20k = 25%. That's Fico penalty territory. The person is forced to use multiple cards. Also, trying to keep all card UT levels under 29% when all charges are reporting becomes complicated. The case 2 scenario essentially requires some early payments to keep all charges from reporting - if there is a desire/need to avoid score penalties.

Many people prefer the early payment game to avoid credit score penalties associated with elevated utilization. It's not for me so I choose to have higher, but still reasonable, CLs. In either case it's about managing credit wisely.

[fury1995]

---

@acercode wrote:

I often see people with $100k+ credit lines and wondering what's the reason for it. I mean they never use them all and if they do, their accounts get shutdown or severedly reduced. So what's the purpose of it, is it just in case of an emergency or is it just part of the credit/FICO game?

---

Because no matter how high your largest credit limit is, this never goes away, lol

"Your largest credit limit on open bankcard or credit card accounts is too low"

[cashorcharge]

The MyFICO affect is real. It is easy to get sucked into "oh look at that approval....wonder how I would do" and then it starts. 

With over $1M, I may never use it all but it's nice to know that I can if I need and I always figured applying when I didn't need it was easier than if I did