Is it possible to have too high a credit limit? Right now, I have two credit cards, one with a credit limit of $25,000 and one with a limit of $15,000. My annual salary is only $35,000, so I could never responsibly charge anything close to the limit on these credit cards. Self control

with credit isn't a problem for me. I never carry a balance and generally only charge a few hundred dollars a month on my cards. I've heard that having a high credit-to-debt ratio is good for my credit rating, but can too much credit hurt my score?

A credit score is based on the information in your credit report. That information is categorized in five basic areas, shown below with the weight each factor has in the credit scoring model.

Payment history -- 35 percent
Amounts owed -- 30 percent
Length of credit history -- 15 percent
Types of credit used -- 10 percent
New credit -- 10 percent

A high ratio of debt-outstanding-to-credit-available, what you call a high credit-to-debt ratio, negatively impacts your credit score, but there's a downside to increasing credit lines on existing cards or applying for new cards in an attempt to reduce that ratio. With $40,000 in available credit and you paying off your low balances every month, there's nothing to worry about here.

Lenders also consider your ability to carry the debt load. That deals with the income side of the equation, and that isn't specifically considered in your credit score. It's called capacity, and it considers whether you have the income to service your credit lines.

If you want to manage your credit capacity, you can tell the credit card companies to reduce the credit lines available on these accounts. That frees up capacity. The effect on your credit score will depend on how you use your cards. Since you generally only charge a few hundred dollars per month on your cards, the effect should be negligible if you went from $40,000 to $30,000 in combined credit lines on these cards.

[此贴子已经被作者于2006-10-24 15:10:43编辑过]