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High limit credit cards and FICO scoring

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Anonymous
Not applicable

High limit credit cards and FICO scoring

Some years ago I read, I believe on ficoforums, that credit cards above some threshold limit-- e.g. somewhere around $35k-- were ignored in scoring or treated as some other kind of less important credit instead of counting as revolving accounts.

 

As a result I tried to keep single cards below ~35k in limits and instead favored getting more cards in order to keep my utilization low. I have a score >810 according to amex/citi. I pay in full each month, but prefer to keep as much on cards for as long as possible to maximize interest/investment returns and minimize my exposure to inflation.

 

I'm now at a point where I have 30-35k limits on all my cards and would like higher limits but really don't want to manage more cards.  I'm having a little trouble finding the original thread(s) where this was discussed. Am I imagining it?  If not, where exactly are these thresholds on which scoring models? (I'm perhaps more interested in the models mortgage lenders use, since a better score can be pretty valuable in that context).  Is there anyone which only has revolvers with limits over $50k that has a high score?

 

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expatCanuck
Super Contributor

Re: High limit credit cards and FICO scoring


@Anonymous wrote:

...(I'm perhaps more interested in the models mortgage lenders use, since a better score can be pretty valuable in that context). ...


Having recently completed a refi, I can offer that the mortgage brokers I spoke with advised that once a score is above 740 (or even above 710), as long as one has sufficient equity in the property, the rate doesn't improve.  Certainly, that was our experience in the latter half of 2017.


2023 Goal: save 3 months' net income

Starting FICO8: 666 (give or take a FICO)
[ Last INQ 12-Feb-2024 ]
EQ8415 INQ (Auto, CC, HELOC, 2 mort)7y2m
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5/243/12AoYA 0m | AoOA 23y6m~3%
Message 2 of 4
Anonymous
Not applicable

Re: High limit credit cards and FICO scoring

It's a good question.  The old mortgage models have a lower CL threshold for when FICO will remove a card from one's utilization calculation.  $34,900 was supposed to be a safe number.  With FICO 8 the folks here tried to do some focused testing (last year) and appeared to established that 50k was safe there.

 

May I ask you how many credit cards you have, what your total credit limit is, and what your total utilization is -- currently?  If you have eight credit cards with a 200k limit and a 2% utilization (say) I am unsure how it would matter whether a couple of those were increased to 50k or even more.  Suppose those two cards were removed from your util calculation for the mortgage models.  You'd still likely have a 120k limit with the other six cards and a util of maybe 3%. 

 

Of course, another question for such a person is why he felt like he needed a total credit limit much greater than 200k.  What's the need for pursuing CLIs at all in this event?

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Anonymous
Not applicable

Re: High limit credit cards and FICO scoring


@Anonymous wrote:
Is there anyone which only has revolvers with limits over $50k that has a high score?

 


There certainly are.

 

Higher limit cards and cards potentially being eliminated from the scoring algorithm are not going to be a factor when it comes to FICO scoring if you're the type of person that reports low single-digit utilization.

 

I suppose a worst case scenario (and all the stars and moon would need to align for this to happen) would be if a person with $200k in credit limits had exactly 4 cards all with $50k limits.  Under X scoring model, revolvers with $50k or greater credit limits are ignored from scoring.  I would then think that such a person would experience the ding associated with "no recent use of revolving credit" even if they were reporting a small balance on one or two of these $50k lines.  The scoring ding associated with that is typically 15-20 points.  So, your 810 credit score then becomes 790-795, which in terms of being able to obtain credit and products at the best terms is still effectively the same thing.  If losing those limited amount of points is a big deal, all one has to do is keep one card at say a $30k limit and have that be their AZEO card, while all of their other cards can have monster $50k+ limits and balances for that matter since FICO would ignore them.

 

 

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