Do most people really have credit cards with 20-30k limits? (payment, income)
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I've always been curious as a soon to be college grad considering continuing with an MBA in finance, about credit card trends in the US. In otherwords, are a lot of americans walking around with like 3-5 chase cards discover etc lol with HIGH credit lines like 20k+? Or is this a thing of the past (pre-recession)?
Also, what is a realistic limit to expect or ask for on first card. Ideally I'd like a limit no less (or more) then 10-12k. And 2 cards.
I have 5 cards with $100,000 unsecured credit available.
Lenders do look at "available credit" when evaluating, because the of the potential to go overboard on what your budge can handle could put in jeopardy your ability to repay a loan. When we have done mortgage loans (with perfect credit!), each time we have been required to close a card or two that had a high available credit limit (which currently had zero balances). A lender does not want someone to go on a spending binge with their charge cards and then wreck their ability to pay off a loan.
FICO score is not based on amount of credit available but on the credit utilization ratio. Having more credit or less credit available has nothing to do with your credit score.
08-29-2013, 10:59 PM
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Quote:
Originally Posted by josh u
Realistically you should expect under $1000. I just signed up someone for her first credit card (she's a 22 year old college student) and they only gave her $500. My first card had a $500 limit.
By the way, when you apply they don't let you ask for how much credit limit you want. They just give you whatever they think is right. After a couple of years of responsible credit usage you'll get bumped up to $3k~$5k. It's gonna take a number of years before any single issuer will give you a limit over $10k though.
Exactly. Expecting 10k right off the bat is silly. I don't have that despite having had some accounts for over a decade, never missing a payment, never maxing out any cards, and having a salary that puts me in the top 5% for my age group. I haven't ever tried to get the limits increased, though.
I hate using credit cards, but love that I qualify for the 0% rates.
I have several business cards and each are around 18K limit, but I am not foolish enough to max any of them out. I use them if we get in a bind.
I also noticed that when we pay off 4K off 1 card, we get more offers for the 0% cards. I guess even if it is a bt to another card, the creditor thinks we have cash and sends more offers.
Sure, I wish I did not need these cards, but the terms are pretty good. 0% until 2015 is the last one we signed on for last month for $4000.00 of debt.
Our total credit card debt is at $13000.00 with more 0% offers that have already come in. I hate being in debt,but I am glad to not be paying any interest.
I compare it to kicking the can down the road...
FICO score is not based on amount of credit available but on the credit utilization ratio. Having more credit or less credit available has nothing to do with your credit score.
I was the fortunate recipient of a low-interest low-fee easy-to-deal-with bank-issued mortgage on my rental property, and they required closing a charge card or two. Their reasoning? Actually, I did not even care. We did not need those cards, and the loan was great, and I don't believe in making an issue over something that does not even matter to me. What mattered was the good loan package.
Articles are good, and internet advice can be useful. But when push-comes-to-shove, and the bank has a requirement, and I don't even have a issue with what they are asking, I don't make a fight out of it. That's my personal take on my personal experience.
I don't think having high credit limits means your debt ratio is higher. It is your credit utilization that affects your credit. I think you should visit myfico website because I think your rationale is wrong.
It was always explained to me through banks as well as financial managers that regardless if you have a balance on the cards or not there is a potential that you could. If you are trying to obtain a loan the bank sees that potential debt which in turn increases your debt to income ratio and reduces the amount of money the bank will allow you to borrow. It always made sense to me...if I had a 50k limit on my card but had a zero balance, obtained a loan and then charged 50k worth of stuff on the card and my income was not sufficient enough to make both payments the bank is at a loss because I would not be able to pay back the loan. That would be plain stupidity but it could happen say in the event of an emergency or something.
I will have to check that site out though, thanks. Even though I dont need a higher limit, its nice to gain some additional knowledge and maybe realize I have been misinformed all these years, lol
Manage your available credit. Even if you pay your credit card bills on time each month - or carry a zero balance on some - the amount of credit that is available to you can hurt your credit score. If your combined available spending limits are truly more than you need, ask the credit card companies to lower the ceiling. In this area, too much of a good thing is not helpful!
Yes, the "potential" of overextending credit was what lead my bank to require a card be closed prior to funding the great mortgage loan that we ended up with. The question about if high credit limits can damage my chances of a loan or not could be argued endlessly on the internet with someone I'll never even meet, or could be taken at face value from the bank that was lending the money. I'll go with what that bank had to say.
My first card I got when I was 18. 1 year into college, making a whopping 10k a year. I applied so I could have something to build my credit with. Just use it for small purchases here and there to have some history.
I was approved and given a 15k limit. It's since been raised to 21k without me even asking for it. Or carrying a balance.
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