Question

Is it better to have a High Credit Limit or a Low Credit Limit?

So which is better: Keep a high credit Limit but not using much credit on them, OR have a low credit limit but using more credit on them?

Let me explain:

Is it better to have several credit cards with each at a high credit limit (e.g. $10,000 credit limit for each card) or it better to have a low credit limit for each card (e.g. $1500 credit limit for each card)?

I am curious as to whether a person who has a high credit limit is looked upon less favorably because they have more access to potential debt...but alternatively they could be looked on more favorably because they are able to manage money so well that they can have high credit limits (and lets assume they dont use much of the credit).

5 years ago - 5 answers

Best Answer

Chosen by Asker

It's really simple potential credit has nothing what soever to do with your credit score.

The only things that affect scores are;
1. Payment history 35%
2. Time in bureau 15%
3. Types of credit 10%
4. New credit 10%
5. Debt to credit ratio 30%

So for score it only make since to have high limits and low balances this will give you the best score period.

Source(s):

5 years ago

Other Answers

Depends on you. If you have enough self discipline to handle a high limit without USING it, then a high limit looks better on your credit report.

However, if you are one of those who will spend it if they have it, you need to keep your credit limit as low as practical, although this will lower you credit score.

by quizzard123 - 5 years ago

the answer is tricky. high credit limits present a better percentage of credit available vs. credit being used but too much open credit could also hurt you because you have access to too much money. you have to find a healthy medium what i would do is check my fico score every 6 months to see if the credit starts affecting your score negatively

by chet - 5 years ago

The higher limit a credit card company gives you, the higher you credit score is. HOWEVER, if you have too much "potential debt" based on your income, meaning the cards that you have all have really high limits, even if you don't use them, then this could have a negative effect on your credit score. I have a credit card (I got when I was 18) that I have purposely kept w/ a $500 limit. That way I will have a long credit history with something I can charge and pay off every month. I have a couple with higher limits for emergencies, but it is best to keep a lower ratio of debt to equity, even if it is just potential debt.

by *~♥champ♥~* - 5 years ago

better to have a high credit limit, because this gives you a better used credit vs. available credit limit ratio. however, the caveat here is that you must have discipline. if you feel that you will not be able to resist the urge to spend any and all money that you are being extended, than i would stick with the lower credit limit.

by infinite crisis 247 - 5 years ago