Originally Posted by
muji
I'm unclear on exactly what "percentage of total available credit being used" means.
Does it mean, for example, if I have a $16,000 credit line on a given card but never run a balance over $1,000 at any time, my "percentage of total available credit being used" would be 6.25% at most ($1,000 out of $16,000)?
If so, would it be better (for purposes of getting other credit cards) to request that my credit line be reduced - from $16,000 down to $3,000 or so?
Your example is correct. That would be 6.25% credit use. But, where your credit score is concerned, you definitely wouldn't want to lower your CL if you are carrying balances. Because, just as in this case, if you were to lower your CL from the 16,000 to 3,000, carrying the same $1,600 balance, your credit use percentage would then dramatically jump from 6.25 to over 50%. In general, the larger percentage you're carrying of your total available credit line, the more negative it reflects on your credit score.
So the lower percentage the better.
The only reason I can see where you'd voluntarily lower a credit limit is if you are bargaining with a credit card issuer and they assure you of approval if you lower a CL on another card. Then go for it. But I definitely wouldn't just voluntarily request a lowered CL in hopes that might increase future apps. Wait until they tell you that. But even better, try not to carry much, if any balance at all if possible. In my experience, they seem to like that a lot.