Credit limit - to increase or decrease? That is the question!

[Anonymous]

There seems to be conflicting information as to whether high revolving credit lines hurt your FICO score.  The other day I think I made a HUGE mistake by asking two creditors to reduce my credit line in hopes of improving my score but now find out it's doing the opposite.  One example is a 3700.00 balance on an 11,000.00 line.  I was told having 11,000 available would hurt my credit in the area of debt to income ratio because a lender would view it as being an actual balance of 11,000.00.  So I called and requested a decrease to 4,000.00.  Now it looks like I'm maxed out! 

What information is correct?  Have I completely just ruined my score?  What do I do now? 

Thanks.

[Anonymous]

I am unaware of anything that ay that high credit limits are bad.  Having said that I may not undertand what you mean by that. 

But you are maxed out now.  One big factor in your score is what percentage of available credit you are uing.  You increased the percentage by decreasing your total available credit.

[Booner72]

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@Anonymous wrote:

There seems to be conflicting information as to whether high revolving credit lines hurt your FICO score.  The other day I think I made a HUGE mistake by asking two creditors to reduce my credit line in hopes of improving my score but now find out it's doing the opposite.  One example is a 3700.00 balance on an 11,000.00 line.  I was told having 11,000 available would hurt my credit in the area of debt to income ratio because a lender would view it as being an actual balance of 11,000.00.  So I called and requested a decrease to 4,000.00.  Now it looks like I'm maxed out!   Yes I believe you did the opposite of what would have helped.  Luckily you can fix this if you can pay down your cards, or ask them to put your limits back up.  I spent some time in the credit card forum here and read by CC experts to "never" turn down a CLI.  I don't think your credit is "ruined" because what you have done is fixable.  FICO scores don't have "memory" of the revolving debt amounts of the past  - it is scored at that current snapshot in time.

The lender would never care how much your credit limit was as long as you weren't maxed out.  Now you are maxed out.

I made some bad mistakes too to get my score up.  From now on I make sure I know what I'm doing for sure by asking questions and fully understanding here at MYFICO. 

I'm not sure what you are trying to buy, but if it is a house then you can get a rapid rescore done once you have rectified your current situation.

What information is correct?  Have I completely just ruined my score?  What do I do now? 

Thanks.

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[Anonymous]

Oh no.  Thanks for the responses.  Lesson learned.  I'm not sure if they are going to be able to reverse it or not.  How I understood it before is that the lender knows you can charge up the entire line at any time so they figure your debt to income ratio based on the entire amount available in case you were to use it. 

Fortunately, I have two other accounts without a balance and will keep them open.  Maybe that will help.

[haulingthescoreup]

Ouch! It's amazing how much bad info is floating around on the internet, the radio, and the idiot box.

I agree that your best bet is to contact the lenders and ask if they can restore the limits. Stress that you've been a good customer (I assume that you have been ), that you're trying to get your dream home, and that you got some bad advice, and now you see your dream slipping away.   I hope that it isn't, of course, but CSR's and supervisors are human, and they might be able to do this.

Good luck!

[OnTheRebound]

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@Anonymous wrote:

There seems to be conflicting information as to whether high revolving credit lines hurt your FICO score.  The other day I think I made a HUGE mistake by asking two creditors to reduce my credit line in hopes of improving my score but now find out it's doing the opposite.  One example is a 3700.00 balance on an 11,000.00 line.  I was told having 11,000 available would hurt my credit in the area of debt to income ratio because a lender would view it as being an actual balance of 11,000.00.  So I called and requested a decrease to 4,000.00.  Now it looks like I'm maxed out! 

What information is correct?  Have I completely just ruined my score?  What do I do now? 

Thanks.

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Wow! Surely you did't get this advise here. Fortunately, this can be easily remedied by following the above advise.

[GregB]

Lowering your Credit Limits is suggested by some FAKO score providers - very bad advise for your FICO score, which is usually what counts.

I have also seen it being suggested by loan officers in banks. In this case there is some reason behind it. It doesn't raise your scores but the lender may be more willing to give you a loan if you don't have the ability to charge as much on your existing CC. Sometimes they may ask you to close certain accounts. This usually happens only when you are marginal to qualify for a loan. Some loan officers rememeber this and suggest it to other people, where it may be very bad advise.

[Anonymous]

All good information.  I will definitely be coming to this board next time I attempt to 'help' myself.  This was the first time I didn't do the research on my own and went off the advice of someone else without verifying.  Before coming to this board I did speak with one of the companies and was told they couldn't look at my account again for six months so It's going to be a battle but I'm going to follow the advice here, speak with someone higher up and plead my case.  To be continued...