Will a Lower Credit Limit Help Me Get Approved for Cards?
TPG reader Blake messaged me on Facebook to ask:
"Do you ever recommend calling in to receive a lower credit limit than what is granted to you after an instant approval? Is it advantageous to keep limits lower to make room for more cards with the same bank?"
I've got a huge amount of credit open with the 23+ active credit cards I currently have. Frankly, I'm still amazed at the credit lines I get when I apply for new cards. Blake wants to know, if you're trying to get several credit cards from the same bank, will the amount of credit awarded to you really matter?
The answer in my experience is no, it won't. I've never called in to ask for a lower limit, and I've been approved for cards many times from the same bank. The only time I would recommend calling in for a lower limit is if you strongly feel that a higher limit will entice you to spend beyond your budget or comfort zone. If you do overspend and end up in credit card debt, this will obviously hinder your chances at being able to get more cards.
However, if you aren't tempted to overspend, just keep the limit as is for the following reasons:
1. Having more credit available can amp up your FICO score. FICO scores are what most issuers use to determine your credit worthiness for a mortgage, credit card, or other loan, and you want this score to be as high as possible. One factor of your FICO score is your credit utilization, which is basically the percentage of your available credit that you're using. A low utilization is good, so the more cards you have open and the less you use them, the better your credit utilization will be.
2. Banks will often let you move credit between cards. As long as you have a good relationship with your bank and you pay your bills on time, you can usually convince them to switch some or all of one credit line to another account. I would rather have the credit already available and be able to move it around than have it lowered and not be able to access it later.
Assuming you pay your bills on time and your FICO score is high, you shouldn't have a problem getting more cards, and there's no need to ask for a lower limit. If you run into any issues, you can always later ask the bank to switch around the credit. This answer relates to my personal experience, but if anyone has other thoughts, please share them in the comments below .
If you need to get your FICO score, click here, and for more information on how credit card applications affect your score, read this post. The TPG Credit FAQ section also offers some valuable information on credit.
If you have any other questions, please tweet me @thepointsguy, message me on Facebook, or send me an email at firstname.lastname@example.org.