H Credit Guide

How Much Available Credit Should I Have

It’s a little-known fact that credit-scoring companies, such as FICO, don’t give a damn about the amount of money you owe. Even with a $1 or $10,000 debt, you can have a good credit score. For one thing, a FICO® Score only accounts for your credit utilization ratio.

How much of your available credit is being used is indicated by your credit utilization ratio. Ideally, its no more than 30%. If you make excessive use of credit, your credit score will suffer. However, you ought to use some credit at all, just enough to demonstrate your ability to borrow responsibly.

It’s actually very easy to figure out how much credit you need available. Continue reading for two simple methods and a formula to raise your credit limit.

Is too much credit bad for you?

Maybe you have a lot of available credit because credit card issuers raise your credit limits frequently, or you have accumulated a number of credit cards over time.

While applying for too much credit at once will lower your credit score, building up a lot of credit over time won’t Additionally, credit card companies don’t expect you to use all of the available credit, even if they may offer a large amount of it. Your credit utilization ratio, a crucial component that influences credit scores, may suffer if you use the entire credit limit on your credit card.

It is advised that you stay within the limits of your available credit in order to preserve your credit scores. For future loans, you want to have good credit (a FICO score of 690 or higher, for example), as this will result in lower interest rates.

Of course, each lender has its own policies and underwriting requirements, so it is up to them to decide whether to approve you for credit in the future. However, you can feel secure in the knowledge that your credit scores are not directly impacted by the quantity of credit you have available.

How much available credit should I have?

There isn’t a perfect, universally applicable amount of credit that every person should possess. However, it’s a good idea to only take on a reasonable amount of debt that supports your objectives.

Enough to back up an emergency fund

It’s worthwhile to strive toward that objective if having a large amount of credit available to support an emergency fund gives you a feeling of security. You can begin by asking a credit card issuer for a higher credit limit, but don’t go overboard. A hard inquiry that certain credit card companies make on your credit report may result in a brief decline in your credit score.

Additionally, it might be crucial to spread your credit among several credit card companies. In this manner, you may still have access to credit from another issuer in the event that one lowers your credit limit. Keep in mind that credit card companies have the right to reduce credit limits at any time, and doing so is typical in uncertain economic times.

But not enough to get you into trouble

If you anticipate using your credit cards to their maximum or becoming more dependent on them, don’t open too many credit lines. If so, only take on credit that you can afford to repay in a reasonable amount.

Maintaining a healthy relationship with credit

You should anticipate having a lot of responsibility after earning a lot of credit. Don’t take on more than you can handle because you’ll need to dedicate some time and mental energy to your accounts.

Here are some ways to do right by your credit:

  • Remain on top of your payments: Your credit scores are heavily influenced by timely payments, so it’s critical that you always pay your bills on time. Request that the due date for your credit card payments be changed to a date you won’t forget for your convenience. Also, set reminders on your phone or calendar. Or, better yet, automate payments.
  • Maintain your credit card accounts open and active because not using them can result in account closure from the issuer. This can be detrimental because your credit scores are influenced by the length of your credit history. Avoid inactivity with budgeted recurring purchases, even if theyre small.
  • Don’t use more than 200% of your available credit: In order to preserve your credit score, don’t use more than 200% of your available credit.
  • Applying for too many credit cards at once is not a good idea. Give your credit scores six months to recover before applying for another credit card. Before putting another card on file, get used to making timely and complete payments.
  • Examine credit card statements frequently: Examine transactions on your credit card statements on a regular basis. Early detection of fraudulent purchases or errors is important because they have the potential to damage your credit.

Find the right credit card for you.

The best credit cards available allow you to do both—earn more rewards and pay less interest. Simply provide your answers to a few questions, and we’ll focus your search.

how much available credit should i have


What is an excellent amount of available credit?

To achieve a good credit score of at least 20670, strive for a credit utilization ratio of no more than 2030%. Use only 7% to 2010% of your available credit if you have an exceptional credit score higher than 800. This implies that you will desire to have at least 20% of your credit available at all times.

Does having too much available credit hurt your score?

A high amount of available credit won’t harm your credit as long as you don’t use it to accrue large balances. Actually, since credit utilization makes up 30% of your credit score, having access to credit can help you improve it.

What is a good credit limit to have?

A good starting point credit limit for your first credit card could be approximately $1,000. Your credit limit may rise to $5,000, $10,000, or more if you have a strong credit history, consistent income, and a high credit score. This is plenty of credit to make sure you can afford to buy expensive things.

What percentage of my credit limit should I use?

The majority of experts advise maintaining a credit utilization rate below 2030%, while some advise aiming for a single-digit utilization rate (less than 2010%) in order to obtain the highest credit score.

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