How Much Credit is Too Much Credit?

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“John, I am wondering how much credit is the right amount and how much is too much?  Is there a simple answer to that question?”

No, there isn’t a simple answer to that question. There is no “right” amount across the board for each and every one of us.  Some people do just fine with a ton of available credit.  Some people shouldn’t have any credit. And, most of us fall in between somewhere. Further, the developers of credit scores have not stated what they consider to be too much credit or a maximum number of accounts.

Number of accounts

Credit scores may deduct points for having too many accounts. Another factor is too many revolving accounts (credit cards) with balances. The scores also look at the mix of accounts, such as revolving (credit cards) and installment (auto loans, student loans and mortgages).  The actual numbers to each of the above in are considered proprietary in most credit scores.

Available credit

Available credit can be defined as the total amount of unused credit to which you have access. This is usually a credit card specific measurement since most people get all freaked out about credit cards but not other types of debt (other than student loans). For example, if your credit card limits total $5,000 and you have used or owe $2,000, you have $3,000 of available credit remaining.  The less of your available credit in use, the better your credit scores.  It shows that you are handling credit responsibly and that means less risk.

Amount owed

The amounts owed are the balances across all of your accounts.  Credit scores look at the total amount you owe on all accounts and compare that to the original loan amounts and credit card limits. The target percentage varies.  According to FICO the highest scoring consumers use 7% of their credit limits.  According to VantageScore Solutions, you should keep it to no more than 30 percent. I actually like the idea of not carrying any debt on cards because the rates can be very high.

Credit grantors

Credit grantors use credit scores to make decisions, but also use other information not found on a credit reports, like your debt to income ratio.  Income is not on the credit report and is not a component of credit scores, but it is included on the credit application.  The lender takes into account the total obligations in relation to total income.  They also look at the amount of available credit, because this amount could be used now or in the future. Each lender may consider a certain percentage or amount as too much.  For example, if you have $50,000 in available credit, the lender may consider this too much in relation to your ability to pay.

So, to answer the unanswerable question…too much credit is any amount that you can’t pay in full each month (cards) or easily make your monthly minimum payment (loans).

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at, the credit blogger for, and, founder of, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here

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