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Too much total CC credit limit

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    Too much total CC credit limit

    Ignoring "credit cards are teh eval!!", and assuming a very low utilization rate (around 1-2%), when does the ratio between total credit limit and family income (DW and I) become too much?

    Currently, ours is 87%.

    #2
    I have no idea what the magic formula is, but it does exist. Our broker asked us to lower our credit limits when we refinanced several years ago because we had too much available credit. I don't know what the utilization rate was back then, but it is at 1% now and we really haven't changed spending habits. I'm guessing we would have been at around 70% credit limit to income back then.

    Do you have access to a credit monitor with your credit cards? It would probably tell you if your ratio was too high.

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      #3
      Originally posted by msomnipotent View Post
      Do you have access to a credit monitor with your credit cards? It would probably tell you if your ratio was too high.
      Chase CreditJourney ("powered by TransUnion") says that utilization is currently 0%.

      But lenders can balk at new loans when you have too high of a limit, even with low utilization.

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        #4
        I remember our mortgage broker said that a low utilization ratio is a warning sign that you have too much available credit. I know a high utilization ratio affects your score, too. Damned if you do, damned if you don't!

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          #5
          I got a warning that my credit score was low because I used too much credit; I finally got myself debt-free (I have my one-year pin now and my FICo is now about 810 (may have gone up since I last looked - I think 820 is their highest rating).
          I YQ YQ R

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            #6
            Originally posted by GrimJack View Post
            I got a warning that my credit score was low because I used too much credit; I finally got myself debt-free (I have my one-year pin now and my FICo is now about 810 (may have gone up since I last looked - I think 820 is their highest rating).
            Congrats.

            Once you get into the Excellent range, though, no need to obsess about a few extra points here and there.

            EDIT: highest FICO8 score is 850.

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              #7
              Originally posted by jessicaaustin
              I am sorry to say but I did not recommend to get Credit cards my rule is " spend what you have if you don't have done sped and borrow from someone else"
              Using a CC means that you don't:
              • need to carry lots of cash,
              • have to write checks at the store (which is slow and can take time to approve), and
              • get rewards points.


              And it doesn't mean that you must spend what you don't have.

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                #8
                Originally posted by Nutria View Post
                Using a CC means that you don't:
                • need to carry lots of cash,
                • have to write checks at the store (which is slow and can take time to approve), and
                • get rewards points.


                And it doesn't mean that you must spend what you don't have.
                I agree with all of this except the part about checks. Few people write checks anymore. Most pay with a debit card.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

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                  #9
                  Originally posted by disneysteve View Post
                  Most pay with a debit card.
                  Which can get skimmed, and wipe out your checking account balance. Savings, too, if it's also linked to your DC.

                  Sure you'll get the money back. But after how long, and how many bills will you not pay in the mean time?

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                    #10
                    Originally posted by Nutria View Post
                    Ignoring "credit cards are teh eval!!", and assuming a very low utilization rate (around 1-2%), when does the ratio between total credit limit and family income (DW and I) become too much?

                    Currently, ours is 87%.
                    Mine is about 150%. Its never stopped me from being approved for new credit.

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                      #11
                      For what it's worth, there is supposedly a relatively accurate FICO scoring table that is floating out there. I can't be sure if this is it, but I think it is:



                      More or less that's what I look at and try to follow by, although to be honest, I don't care about it too much anymore. My utilization ratio is roughly about 50% let's say.

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