Wow, I've come a long way! Started credit repair on this board 6 or so years ago. Reports were terrible, several charge offs per report, no positives, scores in the low 600's, no credit. Now I'm sitting here with excellent credit, scores in the 750 to 770 range, and about $55k in available credit on the following cards: Citi Plat $12,800 Citi Diamond $2,200 MBNA Plat $9,500 Amex Blue $12,150 Cap 1 Plat $2,200 Chase Plat $7,000 Best Buy $8,900 I've got about a $5k balance spread between two cards, about $6k remaining on a $28k car loan, and $4500 remaining on a $5k RV loan. Credit history is now spotless, and has been for 5 years ever since sued the CRA's to get it that way. Now however, where I once used to battle for and pursue credit limit increases, they are now coming automatically, and are pretty substantial increases. At what point does this amount of available credit begin to hurt me? I don't plan on closing any accounts because I don't want to hurt my average account age. But, is there a point where I should possibly call the lender and say "hey, would you mind decreasing my credit limit?" Or should I just keep moving on until they keep increasing to $100k or some ridiculous amount?
I had a friend with lots of credit who actually wanted a CL decrease, for purposes of limiting theft risk exposure on a card with rebates on gas purchases he intended to be used just for gas, and was told that with his good credit they couldn't give him a low limit card.
I don't think that in terms of FICO scores a long history of open accounts with increasing total available credit ever hurts, or decreases your scores. Many people with long credit histories have lots of currently unused but still open accounts. The steady ratchetting up of limits probably has no negative effect. Closing accounts with significant available credit, even unused ones, increases the ratio of debt to available credit, affecting scores via that component, and may cause rate-jacking on remaining balances. The main cases where I have heard suggestions that closing accounts would "help" have been with people with marginal credit seeking loans from subprime lenders who viewed excess available credit as a risk to the repayment of their loan, or from lending officers who didn't seem to know what they were talking about regarding what went into FICO calculations. This is not an issue of the effect on FICO, but the lender's own policies. The other cases have been where a CC company realized a consumer had recently opened a number of new accounts, and they reduced the limits on their accounts to reduce their exposure. I don't know if this decision was driven by standard FICO scores per-se, via increased inquiry activity, or if FICO even considers the length of time an account has been open, weighing recent accounts negatively. Mortgages appear to be treated differently from open revolving accounts with balances, weighing negatively initially, but pulling scores up over time, compared to balances on revolving accounts. Otherwise, with mortgage balances usually far exceeding outstanding revolving debt, any typical mortgage would negatively swamp all CC balances. Remember that FICO is not a balance sheet calculation of net worth, or solvency. In fact, with many assets not visible to it, including bank account balances, house equity, stock accounts, etc., it can't be. Rather, it appears to be a comparision of one consumer's credit usage and payment history against other similarly classified consumers, scoring in terms of historically determined risk experience with the reference population. It may be their own AR report scoring tracked and used relative month-to-month changes.
"Too much available credit" won't hurt you until you go into specific loans, such as a mortgage type instrument. Your FICO is going to benefit, as long as your utilization is low. Only in certain mortgage cases will it "count" against you. There are federal requirements on secured loans, which factor credit score, total debt, available credit, income, etc. You end up with a "rating" which regulates your available limit on a mortgage and your rate.
