Never “Too Much Available Credit”

Never “Too Much Available Credit”

Too Much Available Credit

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

There is never “too much available credit”, according to FICO spokesman Craig Watts.  The FICO scoring model does not contain any component that punishes people for having too much credit available.

Before the analysis of default probabilities was as sophisticated as it is today bankers feared that people with too much available credit might take the money and run.  Statistics prove that this was never the case.  Some lenders may hold on to this myth.  It was once the accepted wisdom.  People who have a lot of available credit have proven to be excellent candidates who present little risk of default.

Banker’s Point of View on “Too Much Available Credit”

If you were told by a lender that your score is not higher because you have too much available credit that can only mean that the lender is not using FICO as his scoring model.  Some creditors (less than 10% actually) use alternative scoring models called FAKO scores in the credit scoring community.  These alternative scores such as Vantage were begun by the credit reporting companies to compete with the FICO scoring model but they have not caught on with most lenders.  These are the scores you get with Credit Karma and other free credit reporting sites.

If you have a lot of available credit because you have a lot of different credit cards that you applied for recently, then it may be that the inquiries for these cards have pulled down your score temporarily.  These dings to your score because of applications are small and last as a scoring negative for only 1 year even though they appear on your report for 2 years.  Of far more importance is the lasting damage the new accounts have of diminishing the average age of your accounts.  This is another important component of your credit score.  “Too much available credit” is not the problem.

High Credit Score Achievers Average 7 Cards

One thing consumers should bear in mind is that having a large number of credit cards may cause prospective lenders to raise their eyebrows for other reasons.  For some people too many cards can present a management problem with their varying due dates and credit limits.  In banker’s logic it makes more sense to have 1 or 2 cards with large limits, especially if there are annual fees associated with many of the cards. The banker will probably reason that no 1 card would give you a large line of credit so you had to increase your available credit 1 step at a time. But remember, FICO’s “High Achievers” have an average of 7 cards!

Closing some of the cards is not usually the answer.  This will lower your very important debt to available credit ratio.   Having much more credit than you are using is a very important component of your score.  Closing an account does not reflect on your very important “age of credit history” section until 10 years after that account is closed.   At that point all record of the account is completely dropped off your score.


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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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