Credit limits -- do I want them increased?

[Deleted]

Can anyone give me a managing your credit score 101 please?

I have a lot of credit cards, with various limits. They get paid off every month. Our only debt is my student loans, which at this point have a $15,000 balance.

I noticed last month that we got within $1000 of the credit limit on one of the cards I use most often, and I wasn't happy about that (although last month was an outlier). I should probably request a credit limit increase, right?

I guess my question is -- for the purposes of evaluating my credit I know that the ratio of outstanding balances to credit limits is relevant. Is that across all cards (so if I have $100,000 of credit limits on all of my cards combined, but have a balance of $5000 on my cards right now, I'm good) or does the ratio on individual cards matter (so the one card with a $7000 limit but a $6000 balance could be problematic)?

And is there any point at which high credit limits could make me look like a credit risk, or should I try to get as high limits as I can?

Thanks!

[Mushe]

You want to use no more than 1/3 (some say more, but this is the most conservative I've seen, I think from Suze Orman) of any given credit line.

For me, I'd just make sure I had that much room on the cards I use most frequently. But, to answer your question, it's the individual card/credit line you worry about, not (for this issue) how much of your overall available credit you're using.

I'm not sure where the "too much" credit available line is, though. MH gets various credit cards for the bonuses, and the bloggers on that topic talk about how companies will shift credit lines to a new card if they think you have too much already available and don't want to extend more credit to you.

[Deleted]

Thanks. In that case, we definitely need an increased credit limit on that card!

[Mushe]

Since you said last month was an outlier, another option is to make payments before the statement hits, since that's when it would report. We did that when we charged a $7k home improvement project, and that charge put us over 1/3 of that credit limit.

[Deleted]

Dec 22, 2012 10:14:18 GMT -5 Mushe said:

Since you said last month was an outlier, another option is to make payments before the statement hits, since that's when it would report. We did that when we charged a $7k home improvement project, and that charge put us over 1/3 of that credit limit.

That's a good point in case we ever get up close again -- but we're always above 1/3 at the end of the month on that card!