Credit Limits and Credit Scoring

We've known the basics of how credit scoring works for nearly a decade now. Yet I still hear from readers who think they can improve their credit, or their finances, by closing accounts or having their credit limits lowered.

This behavior stems, I believe, from the still-widespread myth that you can have too much credit.

Here's the reality: There's no such thing as too much credit, unless you're a debt addict. If that's the case -- if you've never seen a credit card you couldn't max out -- then this column is not for you. You should cut up your cards, seek counseling and pay off your debt.

Most people, by contrast, handle credit more or less responsibly. Forty percent of cardholders regularly pay their balances in full, according to Federal Reserve statistics, and half of those who do carry debt owe $3,000 or less.

It's those folks I'm talking to. And I'll say it again: There's no such thing as too much credit, particularly these days. Read the "Here's Why?".