Credit...how much?

Heck I'll jump in here

I my humble opinion I think for myself that I still have too many cards hehe. Right now I have 3 major credit cards, one Amex and one retail. I would like to just keep 2 majors, upgrade Amex and keep the retail for a good mix. I also think my limits are a little high for our income and wouldn't mind them coming down a bit.

Honestly unless you are in business I can't see someone ever needing 50K in credit lines 10+ cards etc, that to me is a potential serious problem waiting to happen. Right now my lines are at 17500, and I don't want them any higher, but this is just my humble 2 cents.


mom

 

Also last year I was up to 12 cards and realized this wasn't the way to go, I have closed 7 of them and it has helped my overall score and also gave me piece of mind.


Mom

 

I think $10k is enough

2 major credit cards (MC and Visa) is all one really needs. They are accepted everywhere in the world. More so than AMEX (even though I want one). Why on earth would one need a retail card. But in order to get a high credit score, you need the mixture. I myself would settle for $5k. Easier to pay off than $50k.

 

Re: I think $10k is enough

I think the attraction of retail cards is the special percent off sales or the low or zero financing offers retailers will often offer on their own branded card.

I don't think you are going to see:

"Hurry in this Saturday to Sax Fifth Avenue! Buy anything in the store, pay with your Providian MasterCard and get zero percent financing for six months!"

If you frequent a particular store you might get enough offers on the private-label card to make it worthwhile to carry one.

 

Re: I think $10k is enough

Income plays a big role in ability to repay. I would say 15k is all you really need or would want to PAY BACK. Been as high as 15k owed, and is a slow process to bring down.

 

Re: I think $10k is enough

You know it is kind of interesting to see how much individual credit each person needs. I know in the real estate business that people need large credit lines that are available on a moments notice to secure a property deal that may not be there tommorow. It really has to do with ones threshold for risk. What are we using a credit for in todays society? It seems that people are so inclined to use credit cards for consumables that are depreciating assets and they are so unwilling to use credit for its real purpose, which is to invest in appreciating assets. Quite frankly folks, unless you are buying a house or financing a college education, there are not any other reasons that are financially reasonble for the use of credit except emergencies and for the use of income generating assets. Also credit cards can be very useful in the consumer arena. There are many safeguards to purchasing perishables with credit cards as long as they are payed of immediately.

So to answer the million dollar question, I would want as much credit as a lendor would give me on demand. That would be great!! Then I could invest in all the appreciating assets that I could possibly find. I love to dream!

 

Well, I have not read all of the posts on this subject, but would like to throw in a couple of cents worth anyway.

One interesting note is that not long ago, just after the Rodney King incident, the LAPD was doing an internal investigation of a large number of it's officers and in their investigation, came upon one officer who had 9 credit cards and the LAPD thought that no officer had any need for any such an outrageous number of credit cards.

It just so happens that that's exactly how many I have, and that isn't quite enough in my opinion. I think that having at least 11 plus major gas cards and store cards such as Sears or whatever is about right. That may very well amount to 20 or more. Now that's for personal use only. If you have a business, as I do, then you may very well need a lot more than that and depending on the type of business, your credit limits might very well be around $80 million or more per card. Of course, if you don't have a very large business, then you don't need that kind of limits. And of course, you might very well also have a bunch of employee cards with limits depending upon the amount the employee needs for whatever purpose his work might lead him to need. Usually, that kind of employee card is funded on an as needed basis so that accounting can keep track of what the employee is doing with the money. Trucking firms for instance might have several hundred employee cards plus fuel cards for their drivers.

But on to the personal side of it.

I think 11 major cards is about right and that one should use 1 card for 1 week and then switch to the next card at the end of the week regardless of how much has been charged on the card. During that week, one should make every possible purchase with the card for that week. All of the cards should be arranged in order of their due dates. One should pay the card off in full on Thursday that he intends to use the following week. What happens when one does that is that he is drawing interest for at least 4 weeks on the money he already spent. Of course, that means that one should never buy more on credit than he has the cash in the bank with which to pay. Doing it that way means that one can make a nice chunk of change over the years just in the interest the bank pays on his money.

Think about it. Make sense??

 

Oh How I love leverage! Exponential leverage at that!

 

Works for me.

It will work for anyone.

 

Yep, it works like a charm every month that I float their money and earn intersest. The magic of OPM...

 

I have a question. Several have stated how many cards they think are the "right" amount. But this would be for someone who OWNS thier own home.

What is the correct amount when you are applying for a home loan??

I know they don't like too many. I know they don't like OPEN high limit cards sitting there with no balance on them. (too much potential money to spend). They don't like large balances on the open cards, or cards right at or near the limit.

I have 8 cards.
3 with zero balances, but open with $ 22,100.00 available
1 with 50%
1 with 63%
1 with 70%
2 with 80%

So who knows?

By the way the equity loan I am applying for is to pay off most of these and close them along with buy out 2 family members for a house. Hopefully the bank will realize this when qualifying me.

 

I think you should have at least 4 or 5 cards with high limits to keep your balance / limit ratios down. I don't think 8 cards is too much, but I would try to keep the total number of cards below 10 (the average number of cards most households have). I feel that the number of cards doesn't really hurt you unless you have over 10 cards with a total limits approaching $100,000. I also have 8 cards, but 4 of them are Platinums with high limits so my balance / limit ratios are kept less than 10% and even though my cards are only a few years old, my FICO is 731 and should go up as my accounts age. I know someone who has just one major credit card, perfect payment history on everything (including mortgage), but his FICO is just 740 probably because of a high balance / limit ratio on the one credit card.

 

I have 5 accounts with about 25K credit lines. This is way too much for me, if I ever use it up, I'll be in deep trouble. Anyway, I plan to close one account pretty soon (Providian, who would have guessed it .
This will leave me with a Visa, a MC, an Amex and a Discover. I like having one of each.

As for when applying for a mortgage, I don't know, but I think up to 10k limits are OK, more than that is dangerous... however, this is just my assumption, I'm not an expert. YMMV.

 

I have 9 major credit cards with total limits approaching 100k. For me, this is not too much. It allows me to have plenty of room to shuffle my debt from card to card with balance transfers to obtain low rates while I am paying the debt off. Most of my debt is tuition and college expenses by the way. I think it is a personal choice. I also have a personal loan and student loans.

I just got a mortgage in October. The lender did not care how many cards I had and what my limits were. I was not even questioned.

If you are applying for a mortgage, I would not worry about closing accounts unless the lenders specifically tells you that you need to in order to be approved.

 

I think that several factors enter into the equation for the lender when he looks at the toatl picture.

If you have a large number of cards which are all relatively new, then he is going to think that you are in a very dangerous position because of the potential that exists. However, if you have a large number of cards even with a large amount of $$ limits but your history shows that you actually use them in a way that forms a pattern of never going so deeply in debt that you cannot pay off the balance each and every month in full and a history of doing so, then the lender is not likely to be alarmed by the presence of a large number of cards. It shows a history of responsible use, and he will like that.

Credit cards are not designed to be used in the way most people use them. Most people want,say a new computer or something and they simply go down and charge it on their credit card, paying it off over a period of several months.
Credit cards were never designed for that purpose. That's what finance companies and store credit cards are for. So using credit cards for large purchases which take several months to pay off shows a pattern of irresponsibility. Using credit cards for the purchase of samll amounts never exceeding your earning capacity and paying them off every month on time shows responsibility and improves credit ratings.

Maybe I'm wrong, but that's the way I see it.

 

But a mortgage is secured and takes a priority position over credit cards. So while obviously debt/income ratios factor in, the mortgage company knows it's way ahead of the credit card companies in position for your money.

I would think the credit card companies would be more conservative given their more tenuous position, but as we all know, they're actually very aggressive about granting credit.

Just keep in mind what your goal is with your credit, and act accordingly.

 

There is no limit to how much credit I want. I use it to invest, so I want as much as possible. No amount is too large. There is no such thing as too much credit, if used responsibly, it can be a profitable experience.

www.creditsense.com

 

Thanks, the other.

I am in a mortgage situation now. The lender didnot say anything about having too many and I have about 13. He just warned not to run them up before i settle.