A higher line of credit is generally good, I know. But what if you don’t come remotely close to approaching the limit?
My free, came-with-the-student-checking-account card has had the limit increased every time I’ve carried a balance between months, and apparently the bank thinks I’m safe to trust with upwards of three grand. I sincerely hope not to charge anywhere close to that amount any time in the foreseeable future. At most I’ll charge maybe $150/month, and pay back at least $100, if not the full balance each month.
So, is it still good for my credit if I have a high limit and very low spending? Or should I call up the bank and see if they’ll lower my limit?
A very high limit can actually lower your score. The reasoning is that if you were to max out your available credit then, depending upon your income level, you might not be able to pay it off.
True, but a $3,000 limit is (from my limited experience on the credit score side of my job) unlikely to trigger any concern, especially with a solid payment history. Debt to limit ratio is also looked at, and maintaining a $3,000 limit with $150 or so a month of spending is fine.
NinjaChick, if your bank operates anything like the banks I service, you can certainly call and request a lower limit but based on the situation as you’ve described it, I wouldn’t if I were you. You’re not doing yourself any damage with things as is IMHO.
One thing that rarely gets mentioned in these credit score threads is that it doesn’t really matter what your score is if you have no plans to get more credit. Which doesn’t mean people shouldn’t monitor their credit reports but the level of obsession some people (and I don’t mean the OP) have with the number is bizarre.
Hmm I have some crazy amount of credit between about 4 cards. At least one of them is $40K or so. I think altogether they approach $60K or $80K. Scary.
I don’t have a balance on any of 'em. They just keep upping the limit.
As far as I can tell it hasn’t impacted my credit rating. In fact, I just checked it, and it’s as high as it goes.
I, however, was turned down for a loan because my “debt to equity” ratio was too high. “Huh?”, I responded. “My mortage is small, my truck is paid off, and I pay off my credit cards monthly.” I was informed that the maximum credit limit of the cards was counted in the ratio, and I had a couple of cards with huge limits, along with a bunch of cards I never used. I canceled the cards I didn’t use and asked the bank to lower the limit on the other two. My credit rating became fine and dandy and the loan was issued.
I can see two potential liabilities with an astronomical limit.[ol][]You might be tempted to spend it and have trouble paying it back, or[]If a crook tried to drain your resources, he might be able to steal more.[/ol]OTOH, a high limit might come in handy in a really great emergency.
As a student with limited income, you won’t hit the point where your credit lines get big enough to mess up your ability to borrow.
It’s the cards that’ll get sent to you once you get out of school that get you into trouble.
I don’t at the moment have plans for anything like that, but my concern is that I eventually will stop being a student and start (hopefully) being a normal person in the Real World. So while right now I have no desire/need for another credit card, or to buy a house or car or anything like that, it may well happen sometime within the next ten years, so I don’t want to inadvertently screw myself over.
But it sounds like my concerns were baseless, and the unrelated reason why I might have called them anyway resolved itself, so I’m not going to worry about it.
I’ll want a cite for that, at least so far as we’re talking about FICO scores.
My previous research indicated that your FICO isn’t based on available credit, although certain proprietary lending guidelines and scoring algorithms used by certain industries does discriminate against consumers based on overlarge tradelines.