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Question By
Toastingham

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What is meant by "high credit limits"?
Since the new VantageScore will lower your score for having excessively high total credit limits, I am curious as to what that means. Do they go by credit limits relative to income? To utilisation? Or just a standard absolute amount?

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Top Contributor
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Are you sure that you are not thinking of "high balances"? Either way, who cares what Vantage wants, most lenders use FICO, so that is the scoring system you should be aiming to please.

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High credit limits can in fact be a bad thing.  Even if you are barely using the credit lines and are under 10%, having available credit which too high for your income can be a bad thing.    Imagine you earn 45,000 a year and have a credit card line of credit totaling 40,000.   While you only have 10% utilization and owen 4,000, this is 8% debt ratio which is considered a good figure.   Now, you have 40,000 available to you, you run out and charge this to the max, you now owe 40,000, thus your debt ratio jumps to 88%.   Its a fine line between the two that you need to balance.  Some persons who want to properly manage their credit will actually seek to have credit limits lowered so the credit limit ratio is more in line.   Credit cards are designed for need not convenience.   You can actually be denied credit because you have a high credit limit.   Also referred to as "too many lines of availble credit".  The High Credit  Limit is also part of your FICO score.

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