I just got approved for a credit card limit of 25k!

credit-card.jpgWow, all these years paying my credit card on time and it looks like it’s finally starting to pay off. I have now been trying to build my credit for about 3 years now, consistently checking my credit report and making sure to meet my payments each month and finally, my bank decides that they can “trust” me with a credit card with 25,000.00 dollar limit. Woot!

My first credit card had a limit of 2,000 dollars and back then, that was a lot for me. I was really happy to know that I was worthy of being offered a credit card with that high limit. Ever since then, I’ve always been trying to see how much of an increase I can get by calling and asking every 3 months. So I guess in a way, that was one of my motives for wanting to increase my credit score, so that one day I can have a credit card with limit that’s over 20,000.00 dollars. And now that I finally got this limit, I hate to say it but I think I’m going to have to decline it.

So you’re asking why decline the offer I’ve been working so hard for? Well there are plenty of reasons I guess. Here are 5 reasons:

  • Accepting this credit card with 25,000.00 might lower my credit score. Although my initial reason to build my credit was to have an enormous credit limit, now I’m looking in to buying a house within the next four years. I need to keep my credit score up so that it will help me get the necessary amount for down payment for the house.
  • I already have 3 credit cards and another one is not necessary, especially since I am in the process of getting out of debt from my previous credit cards. Accepting this credit now would be really stupid move for someone whose trying to get out of debt.
  • Having high credit limit is not always a good thing. One, it can lower your credit score, and also what if your wallet gets stolen? Then what? The higher the limits your credit cards has, the more damage the person who finds it can do.
  • Having that high credit card might just influence me to go out and use that card. Not a good thing.
  • I really don’t have the use for it. I’m just happy that I got offered :)

Anyways, on top of my credit card offer which was going for the rate of 12.15%,I was also offered an auto loan for 50,000.00 at 6.24% and also a personal loan for 3,000.00 at the rate of 11.5%. In total, it comes to a nice grand total of $78,000.00! And although it’s very tempting, I’m not accepting any of this.

  1. Maybe you could have accepted that, transfered all of your credit debt onto your new card, that way you have a lower finance on your debt, until you pay it off of course…you did the right thing though in my opinion.

  2. Well that’s not the problem really because I have another credit card that has a balance of zero and if I wanted to I could transfer all the amount on there but I keep it on this current card because it has my lowest APR, which is at 7.9%.

    I appreciate the input kris

  3. I was actually under the impression that the ratio of debt that your cards reported each month was what impacted the credit score, not the absolute limit of available credit. I mean, I realize that FICO is a bit opaque, but I’m not understanding how having a lower debt ratio will lower your score. Unless you think you’ll charge up to that limit?

  4. Ellen,

    You are absolutely right. The ratio of debt is a major factor when computing your credit score. However, I have also heard that high limit on credit cards means you have high liability and more likely to owe debts. Overall, the way I see it is, if I don’t have the needs for a 25k credit card limit, why risk it when it might end up hurting me.

  5. Accepting the line of credit won’t decrease your FICO score (unless you went and maxed it out). In my opinion (always subject to be incorrect, of course), the theory that a high amount of available credit leads lenders to decline you because you may use it all is an old wives’ tale. It’s your overall utilization of your credit balances that impacts your score – keeping your balances at or below 50% of your credit limits will positively influence your FICO score. So, if you wanted to maximize your FICO score, you could take all of your existing credit balances (provided the sum is less than $12,500) and transfer them to the new card. As a result, you’d have 0% utilization on all of your cards except for one, and 50% utilization on the single card. Just don’t close the old cards, because you’ll reduce the average age of your accounts, thus lowering your score.

  6. Great entry, and thanks for taking the effort to publish it; I’m sure other readers benefited too. It really opened my eyes for some new ideas that I hadn’t thought of before.

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