Does the credit limits on credit cards work against you?
By suspenseful
@suspenseful (40193)
Canada
January 31, 2010 7:35pm CST
This is what I was told. If you have too many credit cards, and each have their own limit, if some increase your credit card limit, it makes it impossible for you to get a bank loan. Here is the situation. My husband and I have a bank credit card with about $20,000 llimit. I have not used it until recently because he used it as a back up to his own credit card. We also have a Sears card that has a large credit limit and we used that to buy household items. I have a Visa bank card that gave ash bank, plus two Mastercard Store cards, one with about a $4000 credit limit, and one with a $3000 credit limit. Now all these cards are paid up.
One of the Mastercard Store cards and the Bank Mastercard I share with my husband I want to keep the large limits on them, but I do not need it on the Visa bank card or the others.
Now our friend told us that because of the added credit card limits, if we do need a bank loan (for instance fixing up the back yard or doing the basement) we will not get the loan. We live in Canada. Is there any truth to this?
And aside from canceling the cards that might give us a bad credit rating is there any recourse. I am saving money in my bank accounts in anticipation for any future landscaping and basement renovations, but you never know.
4 people like this
10 responses
@suspenseful (40193)
• Canada
1 Feb 10
I did lower my credit limit on one of my cards, but I want to keep the posted limit on two of them as I plan to use one of them to get my new lap top and since it is a Mac it will be expensive. But there is one card that I tried to get lowered, but it seems that they mismatched the credit card number and the three digit on the back that you are supposed to read out. And now I am locked out of that site, my husband is home, so cannot phone them. I will have to look to see if they have a mailing address. I have another card I have not used yet and this one expires next year in June.
My other bank card, I would like to lower a little bit, but I have to find out how to get in touch with them.
@suspenseful (40193)
• Canada
3 Feb 10
It would be if I charged anything on it, but I remember about our Bank Mastercard, we did not buy anything until the last two months and before that we only got statements when we bought something that was seldom since at that time, my husband would take money out of his stock account.
@suspenseful (40193)
• Canada
3 Feb 10
That is what our friend told us. Of course, when my husband was working, we could have used up our credit limit with no problem and paid it up the next month. But I always thought that the credit limit was the ability to pay, that it meant the customer had enough money saved up, no matter what their annual income or their monthly income. So if one had five cards with a credit limit of $10,000 each. (not talking about ourselves, of course(, one would not go and buy five items that cost $10,000 each because that would be silly.
2 people like this
@suspenseful (40193)
• Canada
3 Feb 10
I doubt anyone has that large a credit limit. And I did hear it is not wise to close the credit cards as it destroys your credit rating. I am thinking of lowering the credit card limit on the ones I hardly use and keep the ones that I use at their same credit limit. I do know that the credit card companies usually give a basic credit card limit unless one has a secured card.
@Lindalinda (4111)
• Canada
2 Feb 10
Dear Suspenseful,
Do not go by what this person or that person tells you. Take all your information about your cards etc. to your bank Make an appointment first, do not just walk up to a teller. A qualified individual will give you truthful and reliable information. Also, one bit of friendly advice. Do not disclose so much financial information regarding your house, your credit cards and in whose name they are on the internet, you absolutely do not know how much information is gathered by scammers and identity thieves. Stay on your guard.
1 person likes this
@Lindalinda (4111)
• Canada
3 Feb 10
All I am saying is that there are people on the internet who try and get as much information as they can about other people and then try to scam them or steal their identity. They can also check profiles at social websites and find out how old people are, what they posted about their spouses, their houses, their credit limits and their illnesses. Senior citizens are often the target of these scammers an stalkers. I know at least one person on Mylot who has been stalked and it was a terrifying experience for that person. That in itself would be be frightening. At least it would be for me. I am also an older person.
So, I will say it again. Make an appointment with an officer at your bank. He or she will answer all you pressing questions. Anybody else who has the same concerns and questions as you have (by the way totally valid concerns) should do the same.
1 person likes this
@suspenseful (40193)
• Canada
3 Feb 10
I will do that. I was told that because we pay off our bills on time, we do not have to worry, but I did want to know if having a large credit limit would work against us.
@suspenseful (40193)
• Canada
3 Feb 10
Another thing, I did not give the exact information, just that we renovated our house because my husband has als, and that we got a van for that purpose, and of course, that would lead to a lot of debt. I did not give my credit card number on the internet only to the bank, etc. I am also sure that there are many Canadians who have the same number of cards and probably more. I did not give the exact credit limit either. Picked it out of the hat but I am sure that if I had kept silent and was afraid of asking the question, someone else would go into a bank with the same situation four or five cards with large credit limits and find that he could not get a loan.Oh does that mean, I can no longer do any online banking?
I do use a complicated password.
@danishcanadian (28953)
• Canada
1 Feb 10
I donèt know, because I only use pre-paid credit cards. I have one from my local bank, where I deposit money into an account that is attached to my credit card, thus my credit limit is whatever I have deposited into the account. I like this, because I am not spending someone elseès money, nor am I spending money that I donèt have.
2 people like this
@suspenseful (40193)
• Canada
1 Feb 10
I had to get my own credit card first because the sales lady would not accept my using my husband's credit card. And I got another one in the mail, and one I applied for. We do have a joint Sears and BMO Mastercard, but even though my husband said it was all right to use them, I knew he would have a fit if he saw the balance even if it was all paid up for. But now that he has Lou Gehrig's disease, I can go and pay by credit card although I usually pay it in full before they are due. And when the statement comes.
@anniepa (27955)
• United States
3 Feb 10
It sure doesn't seem fair, but I've heard that too. I don't know if they do things the same in Canada as they do here but I understand having high credit limits on credit cards and other lines of credit, even if you have no balance, can give you a lower score. Apparently they see "available credit" almost the same as though you had a debt in that amount since technically you could charge that much at any given time. I don't think closing an account should go against you but I'm not absolutely sure.
Annie
1 person likes this
@suspenseful (40193)
• Canada
3 Feb 10
I am thinking of lowering the credit card limit on one of my cards, but as for lowering the credit limit on all the others would not seem feasible. For instance, suppose that might mean charging part on the one card, part on the other card, etc. even though I do have the money to pay for it. I just do not like carrying too much cash around as it burns a hole in my pocket and I am afraid of getting robbed. (I do love the points by the way.)
1 person likes this
@suspenseful (40193)
• Canada
8 Feb 10
It would be sort of dangerous in a crowd to have a lot of cash on you, especially when there is so many evil people around. I also find that when I pay cash for anything since I do not record it in a little notebook first, that I have no idea what I paid for it since often the ink on the receipt is hard to read. Whereas if I buy something on the card, that when the statement comes, I get a record of what I bought.
@anniepa (27955)
• United States
8 Feb 10
I'm with you about carrying a lot of cash around! My husband and I always have the same argument, he's one for taking all cash when we go on vacation and I don't like that at all, especially when he opens his wallet up in a crowded place where I'm always afraid someone is looking to see who has money on them.
Annie
1 person likes this
@MagicalBubbles (5103)
• Canada
1 Feb 10
Hello Suspenseful,
I live in Canada and I know exactly what you're talking about. I also have large credit on my CC and it would have been at a disadvantage if I didnt know what to tell the bank lady. First you must INSIST they do not take your CC into account as a liability if you want a loan. Yes you can do this and INSIST on it. If you pay all of your CC in full when you get your bill or if you dont have any balance on your CC, then you can do it. IF they dont want to, ask to see someone else. I usually tell the bank people that Im not good at financial blabbling and to explain it all to me. Sometimes playing ignorant does pay lol. So they go through everything and when they get to your credit cards, thats when you have them explain in details and you say its NOT a liability because you pay your bills in full and have NO balance. You tell them to take if off of the liability column .......period. Hope it'll work out for you.
1 person likes this
@suspenseful (40193)
• Canada
2 Feb 10
Thank you. I will do that. My friends have balances on their credit cards and also have a rent to own piano, so it would be different for them. So when we do need to get a loan for the basement or the back yard, i will do that.
@Thoroughrob (11742)
• United States
1 Feb 10
Yes it does. We had that happen when we tried to buy our house. I do think now it is probably worse. I only have one now.
1 person likes this
@dragon54u (31634)
• United States
1 Feb 10
I have not heard of this but credit card companies and banks are both scared that people with high limits will throw up their hands in discouragement with the current economic climate, run up their cards then default. I don't know about your banks but the ones here aren't lending to most people or small businesses. I had some trouble getting my house refinanced recently because of all this and was checked out from here to Sunday! Lots of papers to sign and credit checks and crap to make and it finally went through. I think this caution in lending is causing repercussions in the credit card industry. I hope what you say is not true, for your sake. It's good to hear you are a responsible credit card user!
1 person likes this
@suspenseful (40193)
• Canada
1 Feb 10
That is being silly, because all they have to do is to look at the history of the person and if that person has paid their account in full for a number of years then that proves they are a good risk. That is what Capital One does, although it can only be used by people who are employed and not by retirees unless you get the secured credit card. It asks for a list of your payment to other credit cards, how long you have lived in your house, your income, whether you are delinquent in any of your accounts, etc.
I can see someone who is a habitual none payer, not getting a loan to fix their house or for a remortgage, but not one who pays their credit card. And they could also tell what cards they are not using.
@Hatley (163776)
• Garden Grove, California
1 Feb 10
hi suspenseful if I were you I would talk to someone you trust in
the bank where you do most of your banking. I am not sure that the limits work against you as I got into trouble with my credit cards and finally got out. now all I have is one debit card. but you sound like you have a really good high credit rating. So I really do suggest you speak to a bank manager and get some good advice. good luck and God bless.
1 person likes this
@suspenseful (40193)
• Canada
1 Feb 10
I do not want the credit limit on the bank where I do much of my banking, but the bank on which I do occasionally (I would have closed that account except I already got my Canada pension from that bank, and when we needed extra money to fix up the house, my husband went to that bank to start a transfer. He did not go to the other bank. So I am stuck.)
I have three cards that I use all the time, but one did not need a high credit rating, so I lowered that. That other bank I would not mind lowering it because I use it for my cell phone bill and ordering magazines, but I have a whole lot of checks ()yes needed one of those for the transfer to start.) so I have to wait until the checks run out.
@suspenseful (40193)
• Canada
2 Feb 10
The trouble is that here in Canada, they add all the credit limits of the cards and if they are not less then your annual income, you cannot get a loan. Yet if some place accepts only visa, you need a Visa card, and some place accepts only Mastercard, you need a Mastercard, and if you get large purchases that you pay off before the statement is due, well you have large credit limits on both of them.
