Is it possible to have too much available credit?
Key takeaways
- Many consumers wonder if too much available credit can negatively affect their credit profiles.
- As long as you don’t use your available credit to run up high balances, a high level of available credit won’t hurt your credit.
- In fact, available credit can improve your credit utilization, which accounts for 30 percent of your credit score.
Whether you have more available credit than you can use shouldn’t be on your list of issues to worry about when it comes to your credit and your credit score. As long as you aren’t tempted to max out your available credit limits, extra available credit is not a big deal.
In fact, having more credit than you need can help one of the most important categories contributing to your credit score — credit utilization. This factor makes up 30 percent of your FICO credit score — which means the more available credit you have, the easier it is to score higher in this category.
Is it bad to have a high credit limit?
No — whether you’re awarded a high credit limit based on your income, showing a good or excellent credit score or both, a high credit limit tells future creditors that you can handle borrowing money and paying it back on time.
A high credit limit doesn’t mean you have to use it, and you aren’t penalized if your spending never gets close to your limit. In fact, a high credit limit makes it easy to keep your credit utilization low.
Most experts agree keeping your credit utilization below 30 percent of your available credit limits is a good idea, and keeping credit utilization below 10 percent of your available credit limits can help your credit score the most. This means keeping your credit card balances below $3,000 for every $10,000 in available credit you have at a maximum, or below $1,000 for every $10,000 in available credit for the best outcome.
If you have a credit limit of $20,000 on a single credit card, this means you could owe $2,000 on that card and still score well for your credit utilization ratio. Ultimately, high credit limits give you more wiggle room to carry a balance without appearing credit hungry to the credit bureaus or hurting your credit score.
If you’re curious how much credit you’re currently using, use Bankrate’s credit utilization calculator to see your total credit expressed as a percentage.
What is the ideal amount of available credit?
The ideal amount of available credit to shoot for is any amount over 90 percent of your credit limits. For best results, you should strive to maintain $9,000 in available credit or more for every $10,000 in credit limits you have.
You may also want to make sure you have enough available credit to get you through an emergency, particularly if you’re building or rebuilding an emergency fund. For example, it makes sense to have enough available credit to cover a surprise car repair so you can get your car back on the road to go to work, or enough available credit to cover a few months of living expenses if you face a loss in income or lose your job.
Most expert suggest three to six months of emergency expenses kept in savings, just in case. The best high-yield savings accounts offer high APYs that can help you build an emergency fund as quickly as possible.
Because only 48 percent of Americans report having a three-month emergency fund, according to Bankrate research, a credit card with plenty of available credit can serve as a backup. Cards can also be a convenient way to pay for emergency expenses upfront — and potentially earn rewards — before reimbursing yourself from your emergency fund.
Average credit limit statistics
The average credit limit for Americans varied dramatically by age and generation in 2022, according to 2023 credit card data from credit reporting agency Experian. Average credit limits also increased across the board for every generation from 2021 to 2022, with baby boomers having the highest average credit limits overall.
| Generations | Average credit limits 2021 | Average credit limits 2022 |
|---|---|---|
| Source: Experian State of Credit Cards |
||
| Generation Z (ages 18 to 25) | $9,857 | $11,290 |
| Millennials (ages 26 to 41) | $22,136 | $24,668 |
| Generation X (ages 42 to 57) | $33,694 | $35,994 |
| Baby boomers (ages 58 to 76) | $38,898 | $40,318 |
| Silent generation (ages 77+) | $31,937 | $32,379 |
Average balance statistics
Experian data further revealed that the average credit card balance across Americans of all age groups came in at $5,910 in 2022. This average is 13.2 percent higher than the year before, at which point the national average credit card balance came in at $5,221.
Average credit card balances also varied by generation, but increased for all generations in the third quarter of 2022, compared to the previous year.
| Generations | Average credit card balance 2021 | Average credit card balance 2022 |
|---|---|---|
| Source: Experian State of Credit Cards |
||
| Generation Z (ages 18 to 25) | $2,282 | $2,854 |
| Millennials (ages 26 to 41) | $4,576 | $5,649 |
| Generation X (ages 42 to 57) | $7,070 | $8,134 |
| Baby goomers (ages 58 to 76) | $5,804 | $6,245 |
| Silent generation (ages 77+) | $3,177 | $3,316 |
Average credit utilization
Average credit utilization varies by credit score range — unsurprisingly, consumers with the best scores tend to have the lowest utilization overall. This is partly because consumers with good or excellent credit can be approved for higher credit limits, but it’s also due to the fact that lower credit utilization leads to higher scores in the first place.
The following chart lays out the average credit utilization by credit score range in the third quarter of 2022, per credit reporting agency Experian.
| FICO score range | Average credit utilization 2022 |
|---|---|
| Source: Experian State of Credit Cards |
|
| 300-579 (Poor) | 82.1 percent |
| 580-669 (Fair) | 56.1 percent |
| 670-739 (Good) | 35.2 percent |
| 740-799 (Very good) | 14.7 percent |
| 800-850 (Exceptional) | 6.5 percent |
The bottom line
Having too much available credit isn’t something to worry about, yet there are other credit factors that should have your attention. For the best chance at the highest possible credit score, make sure to prioritize paying your bills early or on time while striving to keep your credit utilization as low as possible. The second part of the equation actually becomes easier when you have high credit limits, so no need to let the issue of plenty of available credit keep you up at night.
