Is It Possible to Have Too Much Credit?

If you think about the concept of having too much credit, several things come to mind. People with excessive amounts usually have an exorbitant amount of debt, too many accounts which can affect their credit rating, and too much accessible credit which can lead them to problematic situations. In this article, we will discuss these three concepts in relation to credit to see if it is true that too much credit is actually bad for you and how managing your credit appropriately can help your credit rating.

too much creditCan You Have Too Many Accounts?

In today’s society, it is not unheard of for people to have multiple mortgages, several credit cards, and an assortment of student loans that they simply cannot pay off. The days of having a single breadwinner, a mortgage, and possibly a car payment are a thing of the past. If you do have too many accounts where you owe a substantial amount of money, you should know that you can actually harm your credit rating by having too many of them. Fortunately, the harm is very minimal, especially if you do not have an excessive amount of money owed on each account. As long as you can make the payments, you will be just fine.

Can You Have Too Much Available Credit?

Many people have bad credit cards with excessively high limits. It is a common thought that lenders will look down upon those with too much credit availability, yet this is not the case at all. Your credit score is actually not affected by having too much credit available. It just depends if you owe a lot, not how much you potentially could rack up on the accounts.

Will Too Much Debt Affect Your Credit Rating?

According to FICO, the amount of debt that you actually owe is representative of 30% of your overall score. For instance, if you have several accounts with balances on them, and many of them are revolving accounts, the amount that you owe, in proportion to the amount of money that you earn, can affect your debt loan ratio, thus adversely affecting your ability of getting additional credit, or loans, in the future. However, if you are making your payments regularly, and have not been late, this will show that you are in good standing, and actually help your credit rating because it shows that you are in control of your finances.

Understanding how lending institutions and credit agencies look at your overall credit rating can be a tricky scenario. Based upon what we have presented regarding having too much debt, too many credit accounts, and your credit availability, it is clear that none of these an easily negatively impact your credit rating. As long as you are able to make your payments, and your debt loan ratio is not affecting you financially, this will weigh in your favor in regard to lending institutions and credit reporting agencies clearly showing them that you are managing your credit in a responsible way.

 

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ABOUT THE AUTHOR
This article was written by the writing team of NewHorizon.Org. The company is continuously giving out information to people who are ready to repair their credit and improve their credit score. If you are looking for more bad credit credit cards, click here.

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Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

7 Comments
  1. Having too much credit is optional and one that I would rather not take. I think it is safe to have no more than 2 credit cards and to pay your bills off on time. You will be fine and credit will not be an issue.

  2. Never heard of having too much credit being a problem 🙂 Unless you abuse it, then there is the problem.

  3. It is best to not know if you have “too much credit” because it is tempting to go out and abuse it. That is my personal opinion.

  4. Having too much credit is a problem because it gives you a belief that you can go on a spending spree. My momma taught me to never spend more than what you earn and I am glad I listened.

  5. If you are educated on when it is appropriate to use credit like for emergencies and not spending recklessly, having extra credit can be helpful.

  6. LOL~ It’s a good thing I decided to do some research on this, because my husband came home today and he kept on insisting that we need to close a couple of credit card accounts, because we have way too much available credit. I thought it sounded weird, but then he convinced me that the banks would consider people like us risky. Anyways here I am and of course I was right, having lots of credit couldn’t hurt your credit score. What a silly husband I’ve got 😛

  7. I’ve been burnt before spending beyond my means, so I make it habit to always be frugal and to remind myself of the tough times. Today I’ve got more credit than I need and the only reason why I have so many credit cards (and so much credit) is because I need to keep my credit scores up. I too wondered if having too much credit could work against me somehow, but I should be fine as long as I’m not shopping for a big loan, which I’m not.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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