Can you have TOO MUCH available credit?

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Z06Biker
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Can you have TOO MUCH available credit?

Postby Z06Biker » Wed Apr 24, 2013 4:52 pm

A lot of travel experts talk about inquiring about credit-limit increases for their credit cards every 6-12 months "like clockwork." They say as long as you keep the cards active and indicate to the banks a relationship of good-faith, it's the best way to keep your credit:debt ratio low and pump up your FICO.

My question is two-fold:

1) Assuming you *do* request a credit limit increase every 6-12 months, you can't do this in perpetuity, right? So how are you supposed to know when to stop and be happy with what you've got?

2) At what point does your total available credit (across all your cards) indicate to lenders that you have "more than enough," at which they begin declining CLI's? Other than your credit score, what factors influence what your theoretical "cap" is? Income? Size of previous charges? Or...is there NO theoretical cap?
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selfmadetool
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Postby selfmadetool » Wed Apr 24, 2013 5:06 pm

1. When my spending habits no longer justified a CLI, I stopped, so it's relative. If you take your family out to dinner and you have to split the cost on multiple cards, or you have to wait for a payment to clear before there's enough available credit to begin using your card again, it's probably time to go after some increases. When you can comfortably charge monthly expenses to your cards and have your utilization under 10%, you're probably all right.

2. I would think the factors vary from issuer to issuer. When your available credit is several times your income, that may send up a flag.
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FutureBillionaire
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Postby FutureBillionaire » Wed Apr 24, 2013 5:53 pm

selfmadetool wrote:1. When my spending habits no longer justified a CLI, I stopped, so it's relative. If you take your family out to dinner and you have to split the cost on multiple cards, or you have to wait for a payment to clear before there's enough available credit to begin using your card again, it's probably time to go after some increases. When you can comfortably charge monthly expenses to your cards and have your utilization under 10%, you're probably all right.

2. I would think the factors vary from issuer to issuer. When your available credit is several times your income, that may send up a flag.


I agree with this assessment.
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Sevenfeet
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Postby Sevenfeet » Wed Apr 24, 2013 8:42 pm

I've increased my overall credit limit by $106K since January, mainly since I believe that I was underutilizing the credit I could actually carry. I still am under my personal income and way under total household income. My original goal was about $150K total. I stand at $132 now. A few more CLIs and I think I'll stop.
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Chase Freedom Visa ($25K)
Fidelity American Express ($20K)
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FastSRT8
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Postby FastSRT8 » Wed Apr 24, 2013 11:09 pm

I believe in 'simple' math. If I can charge what I need without any hassles then I'm good.

I never ask for an increase. Seems like the increases come to me and is based on my spending pattern. This is fine by me.
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hematino
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Postby hematino » Thu Apr 25, 2013 12:48 am

For me its a game. My total available credit currently is about 1.5x my income. A few times last year I got declined for CLI's and in one case a card for having "too much credit compared to income." However those same issuers have all given me CLIs since then with no change in my reported income. I just like pushing my luck and seeing how far it can go, I'm sure there are others here with much more credit compared to their income than I have.
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Robrus1
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Postby Robrus1 » Thu Apr 25, 2013 7:56 am

If you're comfortable with your current limits, I don't see the point in going for a CLI every 6 to 12 months, especially if you don't need it or it's on a card you don't really use much. I don't see it helping your score significantly, I mean what's the difference between that and 1 less hard pull? My plan is to get pretty good size limits on the cards I like to use and stop.
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namvet
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Postby namvet » Thu Apr 25, 2013 12:58 pm

IME the answer is no. With 40+ years of credit experience I have never asked for a CLI and have never been turned down for new credit when I asked for it. Management of your credit is the key. Never request new credit if your last request was 6 months or less ago. Pay on time and don't max out your cards and credit will always come you way.

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Z06Biker
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Postby Z06Biker » Thu Apr 25, 2013 3:44 pm

All good points, guys.

I guess my chief concern was that by theoretically achieving a massive total credit line, then in the case of something catastrophic where one would need to slap a big sum of cash on a card, then the total credit utilization would still be comparably low? And regular month-to-month purchases, even with occasional large discretionary spends, would still barely register more than a blip on the FICO radar.

I've never had a bank reach out to *me* to offer an increase in spending power. How does that work? A letter in the mail?
AMEX: PRG Gold, Business Simply Cash, Business Costco, BCE.
Chase: United MileagePlus Club, Sapphire Preferred, Amazon Rewards
Barclaycard Arrival World Mastercard
HSBC Cash or Fly World Mastercard
USAA World Mastercard, USAA Platinum Mastercard
Wells Fargo Business Platinum
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im_mr_awesome
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Postby im_mr_awesome » Fri Apr 26, 2013 12:21 pm

I've been given a CLI several times without requesting it, but only on cards I was inititally approved at a low amount. For example, when I started to build my credit, Capital One gave me a CLI of 50% after about 6 months, and in the 3 years since I opened my American Eagle card with GEMRB, I've been given CLIs from $150 to $720. Obviously this is not in the league of what you're talking, but it might be an answer as to how much a bank really wants to increase a limit without a request.
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