Credit limit ratio

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TEXAS2LO

TEXAS2LO

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Alright so let`s see who can be helpfull !

I presently have 3 credit cards and honestly only use one when needed.
We all know that the more credit you have, the less good it is for you presonal credit.

Therefore I plan on closing down 2,and keep the one I use with benefit ( such as 1% cash back, lower interest rate, etc .... )

Now whats a good credit limit to have ??

I mean how do we calculate a good ratio ... should I keep it to minimum since it's only a card I use for bigger purchase in order to use that credit and gain points ?

Should I leave it at 5 or 10 or 20 ?

Is there something I can use for ration such as :

I make X $ per year so I should not have a credit limit higher then X


Thanks,
 
The way I decided my limit was: If I were to buy something solely on credit, what would be the maximum value of that purchase? Seeing as how a credit card is used for retail purchases that you didn't wish to finance on a time basis.

I'm not sure that having a lot of credit available to you is negative for you personal credit, I thought it simply limited your ability to ask for larger sums, such as a mortgage. Having a lot of available credit represents what the bank deems as being your reimbursement capacity.
 
Subzero said:
The way I decided my limit was: If I were to buy something solely on credit, what would be the maximum value of that purchase? Seeing as how a credit card is used for retail purchases that you didn't wish to finance on a time basis.

I'm not sure that having a lot of credit available to you is negative for you personal credit, I thought it simply limited your ability to ask for larger sums, such as a mortgage. Having a lot of available credit represents what the bank deems as being your reimbursement capacity.
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Ugh I'm pretty sure that when your applying for a morgage the banks view those high credit card limits as potential liabilities and frown upon them.
 
Spiter_01 said:
Ugh I'm pretty sure that when your applying for a morgage the banks view those high credit card limits as potential liabilities and frown upon them.
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Exactly. When you apply for a mortgage, the first question they usually ask is how many credit cards you have. They then tell you to close X number of cards for better chances of passing. Actually, thanks for posting the thread Jesse. I now am up to 3 credit cards and 1 credit card from Futureshop. Im gonna close the futureshop one and another credit card, as my situation makes 0 sense right now. I can go to the bank and pull out more money tonight, then I make in a whole year LOL. I would say 10-20% of your yearly income should be your limit.
 
I really don't see the point of having more than 2 credit card maybe 3 MAX.

Normally we only use 1 credit card and the other one only serves as back up.
 
I don't need them loll.

The 2 last ones I got were because I was buying stuff andthey would offer 10% off if you get their credt cards bla bla bla and on 1000$, well 100% off shows !

I'll call this morning and close down 3 cards. Keep one at 10K.

I honestly don't roll on credit so having 4 cards for nothing can't be helpfull in any ways in my case.

EDIT :


I just called and cancelled a M/C HBC that I had used once to buy my espresso machine. At frist I thought the limit was around 2K but holly **** limit was at 6500$ without even me knowing !!!!

Anyways as I was speaking with the guy, he explained that its good and its bad.

The good :

Exactly what you guys said about the loans, mortgage .. bla bla, which I knew because when I applied for my mortgage it was the first question asked.

The bad :

He said for those who roll on credit, well having more credit card, gives you more credit available so in another way it reduces your debt percentage. Which I couldnt care less bacause all my cards are at 0.

So I close it.

2 More to go :p
 
^ For mortgages and when applying for loan it'll affect your credit because you're a liability (like Vitulla said, he can go and pull out more than he makes in a year within a couple of minutes..) but if you leave your cards empty/accounts opened and dont use them, they see it as a "good" thing because you're surviving without having to use credit, therefore your credit rating starts going up.

I cancelled my visa (bad idea), which left me my MasterCard... I found out the above and went and applied for the FS card and another CC where I got high limits on both (most of you know my age, so I shouldnt have to say it but I was VERY surprised I have this much credit at this age..) anyways Im not planning on even using the 2 mentioned above and my spending hasnt changed for a couple of months on the first card I've gotten (monthly gas..)

My advice, if you're not applying for anything, cut the cards so you cant use them (keep them around) once a month make sure you're account is at 0$ for those accounts and leave them opened. It's not like it's costing you anything (depending on the card) and you're building your credit.
 
TEXAS2LO,

The more credit you have (available or not available to you) the worse it is for your credit and the rating.

Basically when applying for a mortgage or any other form of credit, the lender always takes the total amount of credit available to you and calculates your borrowing power based on you going out and maxing out every card, line of credit and mortgage etc.

My advice to you is:

- Only have one credit card with the lowest interest rate possible and use it when you need to.
- Secure a line of credit with your bank that you can use as leverage for future investments.
- Try to stay away from accepting and/or filling out applications for other credit.
 
There is a huge difference between having credit and owing credit. The reason credit card companies increase your credit is because they feel as though you will be able to re-pay your debts with relative ease. The decisions to increase your credit are based on certain factors that resemble the activity of other consumers in the past (paying your bill on time, using a certain amount of credit, etc.) who they beleive merited higher levels of credit. This is pure statistics, so don't take it personally when you get some kind of a change, good or bad.

Now to say that getting a mortgage or a loan is harder when you have more credit is not necessarily true. Sure, if you have three maxed out cards there is a good chance you're not gonna get approved for any kind of loan, collateralized or not. At the same time, an individual who has no experience with credit of any kind poses just as much of a threat because they are not accustomed to how it works and to having financial obligations beyond the use of cash.

The key is an individual's USE of credit and not simply the absolute amount of credit they have. A person with $50,000 worth of credit who nearly maxes out every month and pays on time can be less risky than a person with $5,000 worth of credit who doesn't use it at all. It's all relative.

My suggestion would be to sit down with the company that you like best and negotiate to have them increase your credit with them as you simultaneously eliminate your other sources of credit. This would make them first in line to get paid if you were to rack up some debt which would benefit you and them at the same time.
 
i had 2 credit cards at one point...... what i did was i closed my 1st credit card, and i got them to combine the 2 limits onto my 2nd...so in turn i ended up with 1 card, and a higher limit
 
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