Credit Card limits

any reason why not just leave it that high?

 

Unless you are worried that you might rack up that much debt, leave it. What 'dings' your score is the reduction of available credit. If you lower your limit or cancel the card, you have less available credit, so your debt to credit ratio goes up, giving you a lower score.

 

Shred the card and keep renewing it when you get the new card shred that card

 

One problem that can occur is that if you apply for a mortgage or some other large loan, you can be declined because of your available credit being too high.

Funny though, I didn't know that asking for an available credit reduction could negatively impact your credit score. We recently did that on 3 cards and our credit rating went up. So I'm confused about who told you that reducing credit card available credit would hurt your score.

 

One of the basis of the fico score is the percentage of debt you have if you have a revolving debt of 1k with available credit of 10k you are using 10% of your credit. If you cancel a card and your available credit drops to 8k then you are using 12.5%. Don't forget that this is just one of the items that go into the score. Paying your bills on time; length of credit, etc…

 

bruinsrme get a free credit report to make sure there isn't anything funky out there on your name. You are entitled to one a year from each of the three bureaus. I personally make it a habit of getting one every year since I got my first credit card. And I have kept every single one.

Your paying a lawyer with a credit card!?!?! at those ridiculous rates?

 

You can get your free reports at:

https://www.annualcreditreport.com/cra/index.jsp

You are entitled to one report from each bureau. Smart move is to get one every 4 months.

 

I thought the same thing as red.

"Available credit" is the same thing as a loan. The banks assume that the higher your credit card limit, the bigger the risk you are for paying back a bank loan or mortgage, since you could potentially use up your entire $57000 credit card limit in 1 minute. In other words, you could potentially go from being completely CC debt free, to completely max'ed out in an instant. When your credit rating is being considered, either a huge limit on a single credit card, or a large number of credit cards with smaller limits, actually hurts your credit rating.

Cancelling some credit cards, or lowering your limit should actually improve your credit, since you have less potential to accumulate debt through your CCs, which decreases risk for the bank.

Of course, a history of paying back your loans and credit card debt is also factored into it.

Yes, I'd like to know too, please.

I'm not an expert, so if I can learn something, then great.

 

I'm always confused about credit card limits affecting credit score. I think I have 5 credit cards, one of them doesn't have a "limit" on it. But I only use 2 and I always pay it in full. My gf and I are house hunting right now and I got a pre-approved mortgage for alot more than I thought I could get and that's on my salary alone. No wonder the economy is the way it is right now.

 

If you have too much credit available is could negatively effect your score.

However, if you debt to credit ratio is high, then your score will be low. Aim for a debt to credit ratio of less than 1/3.

Make sure you don't make more than 2 applications for credit in any period of six months. Anymore than 2 searches will begin to negatively effect your score.

If cancelling this credit card will shoot up your debt to credit ratio, then do not cancel the card.