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Ask Creditnet: What to Do When You Have "Too Much Open Credit"

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Dear Creditnet: I recently applied for a 0% interest credit card and was declined because I apparently have "too much open credit." What exactly does this mean?

I have good credit and pay all my bills on time, so I was really surprised when I got declined. What should I do next?

Answer: I'm not sure what your current FICO scores are, but credit card lenders are even declining applicants with good credit scores these days. So don't feel bad. In fact, the "too much open credit" declination is a common reason lenders use when declining applicants with solid credit histories.

"Too much open credit" basically means you have too many open revolving credit accounts, which indicates high risk to the credit issuer. If you have a lot of open credit lines, regardless of how good your credit score is, you have the ability to rack up debt fast.

Of course, your credit score indicates you wouldn't do that, but credit card companies are very cautious lately about who they offer credit to. All they see is a bunch of open accounts and available credit on your credit reports, and they simply wonder why you need another one?

The first thing you'll want to do is pull your free credit reports and take a closer look at all your revolving accounts. If there are some that are open and never used, consider closing them if it won't have a significant effect on your overall credit utilization ratio. In addition, if you have some cards with very high credit limits, you may want to consider requesting a limit decrease. For example, if you have a card with a $50K limit and you only spend $1K a month on it, have it reduced to $15K which should help with the "too much open credit" problem while not hurting your overall credit utilization ratio.

Furthermore, some credit issuers simply have tougher underwriting guidelines than their competitors, so consider applying for a comparable no interest credit card with a different credit card company just to see what happens. You might be surprised when there are no problems and you're approved on the spot.

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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