CLs, are they ever enough?

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lexrj
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CLs, are they ever enough?

Postby lexrj » Fri May 23, 2014 11:49 pm

I don't even understand why lenders give ppl (including myself) that much credit. I would never spend half of my income (110K) in a month, how is that not consider a risk to lenders? I've always manage my debt (none) and credit very well but it's kinda of scary to think that if one day I decide to go crazy I could get into so much debt that would be inconceivable to pay it back. Don't you guys agree?
I've reached a point (very quickly to my surprise btw) where my total credit limit (56k - 4 cards) is WAY more than enough for my monthly spending (~4k) and is optimal for my avg total utilization (4%), with that being sad, should I continue to increase my credit limits (on my signature) or is it going to hurt me more than benefit?
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MemberSince99
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Postby MemberSince99 » Sat May 24, 2014 5:46 am

I've kind of thought the same thing. When I started all I had was a Crap One card with a 500 limit, which honestly is not sufficient or even close to sufficient. But now, I honestly have more in the way of limits than I need and it's just a couple of cards I'd like to boost up a bit if I could. I used to think a 5k limit was sufficient, and it is, as long as I pay multiple times a month. Now I feel more comfortable with 10k, anything over that is gravy. I could just use my Associated card for everything and just pay when the statement cuts and be good.


My only real goal at this point is to downsize certain lenders. If they give CLI, great, but I'm not going to worry about it or ask.


So if you aren't comfortable, you can always do like you did and just keep a few open and not ask for CLIs. As long as you are responsible I can't see how it can hurt.

thom02099
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Postby thom02099 » Sat May 24, 2014 10:25 am

lexrj wrote:I don't even understand why lenders give ppl (including myself) that much credit. I would never spend half of my income (110K) in a month, how is that not consider a risk to lenders? I've always manage my debt (none) and credit very well but it's kinda of scary to think that if one day I decide to go crazy I could get into so much debt that would be inconceivable to pay it back. Don't you guys agree?
I've reached a point (very quickly to my surprise btw) where my total credit limit (56k - 4 cards) is WAY more than enough for my monthly spending (~4k) and is optimal for my avg total utilization (4%), with that being sad, [color="red"]should I continue to increase my credit limits (on my signature) or is it going to hurt me more than benefit?[/color]?


Is this a NEED or a WANT? Only you can decide which it is. Get what you feel comfortable managing. If you're not comfortable with more, then there's no NEED for more. Unfortunately, at some other forums, getting CL/CLI seems to be a competitive sport!
Retired, and in the process of retiring cards!
EQ = 846 EX=828 TU = 836 as of 02/2016

lexrj
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Postby lexrj » Sat May 24, 2014 12:46 pm

thom02099 wrote:Is this a NEED or a WANT? Only you can decide which it is. Get what you feel comfortable managing. If you're not comfortable with more, then there's no NEED for more. Unfortunately, at some other forums, getting CL/CLI seems to be a competitive sport!


Neither, I'm asking as a credit score/profile perspective since I'm already at an ideal credit util % based on my monthly spending. Also, when is it considered to have to much available credit? Is there a ratio based on income?
---------------------------------------
Current in my Wallet
Amex BCP - 25K (02/12)
Barclaycard Arrival WMC - 15K (10/13)

Future
US Bank Cash +

Socks drawer
Crap One Quicksilver - 1.7K (04/11)
CSP - 15K (03/13)

Scores
FICO EX 772 / TU 765 / EQ 762 - (09/14)
AAoA 2.1

thom02099
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Postby thom02099 » Sat May 24, 2014 8:20 pm

lexrj wrote:Neither, I'm asking as a credit score/profile perspective since I'm already at an ideal credit util % based on my monthly spending. Also, [color="red"]when is it considered to have to much available credit?[/color] Is there a ratio based on income?


Probably when credit card companies start saying "no". Not meaning to sound flippant, but there does come a point where the card issuers will be more hesitant to offer more credit limit increases, or smaller initial credit limits, until they finally do say "no". There could be a ratio based on income, but that's probably only one factor. Each company is probably different in that.

Just as an example, in my own situation, I think card issuers look at the Big Picture when I apply for something. They look at my history (23+ years documented on credit reports/actually more like 45 years total), the number of closed in good standing loans, the number of closed in good standing mortgages, the number of auto loans, and finally the number of credit cards. I have a very thick file. I make an average salary (~$65K), but my available credit on credit cards alone is twice that, and I'm sure I could get more if I wanted it. But I don't. Like you, I'm at that optimal place....for me.

Other forums, you'll see people who have available credit that equals to 3-4-5 times their income. And a goodly number like me that have 2x income. I really don't know whether there's a specific ratio that's at play here, or if some of it is just good ol' plain luck.
Retired, and in the process of retiring cards!
EQ = 846 EX=828 TU = 836 as of 02/2016

takeshi
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Postby takeshi » Sun May 25, 2014 10:12 am

lexrj wrote:I would never spend half of my income (110K) in a month, how is that not consider a risk to lenders?

First of all, the risk assessment isn't just based on amount of credit extended.

Second, remember that utilization plays a significant role in assessing your credit. While 10% or less is generally regarded as optimal 30% is the generally recommended max. You don't have to max your available credit to get in trouble. I wouldn't need to spend 1.7x my income (my total CL's) to get into trouble. I'd get in trouble much, much earlier than that. However, that's in general. I've certainly spent significant amounts on remodeling projects, trips and so on. It's not always just about regular spend.

If you're uncomfortable with such limits then why are you asking if you should continue seeking CLI's? What are you looking to achieve? You don't have to seek CLI's just for the sake of CLI's. You can even request CLD's if you think your available credit is too high.

lexrj wrote:Don't you guys agree?

Agree with what? That you could spend yourself into debt that you couldn't get out of? Of course you can. Many do so with much lower limits than what you have. You've established that you're responsible according to the metrics though or else they wouldn't have extended you the credit that you have. That said, you have to do what works for you. Just don't assume that your discomfort is universal.

lexrj wrote:Neither, I'm asking as a credit score/profile perspective since I'm already at an ideal credit util % based on my monthly spending.

In that regard it sounds like you've probably reached the point of diminishing returns. Probably won't hurt until creditors deny you credit (and you can always close, CLD, or find a different creditor if that's an issue) but gains will probably be minimal.

lexrj wrote:Is there a ratio based on income?

Popular discussion topic on several sites (definitely look at existing threads) and there doesn't seem to be an exclusive causal relationship though income is certainly a factor. Creditors do vary in their underwriting critieria as well so even if there was such a ratio it wouldn't be universal.

Dman316
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Postby Dman316 » Sun Jun 01, 2014 8:50 am

Until recently I never liked big limits in the event that someone got a hold of my card number. But now with the better fraud protections I don't as much mind it.
My Cards

Chase Freedom Visa Signature: $5.2K
Capital One Quicksilver Visa: $7.5K
Discover IT: $5.5K
Huntington Voice World Mastercard: $1.6K

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