Very few people every worry about having too much credit. Most of us think of credit as something that we want unlimited access to. Even those who have great credit can find that having too much can be crippling and destructive.
Having too much credit can involve three things: too many accounts, too much debt, and too much available credit. People who have too many accounts leave themselves open to trouble on several fronts. One is the problem of keeping track of the due dates on all of the loans. The other problem is that lenders and credit reporting agencies have a mathematical equation that tells them if you have too many loans and when it is time to deny you another one.
What is too much debt is an individual conundrum. Your income is one factor, another is how much credit you have available. If you are using 100% of your available credit, you are damaging your credit score immensely. You need to keep you debt under 25% of your credit limit on all revolving accounts.
That brings us to the ”too much available credit” timebomb. A major portion of your credit score is based on the length of your credit history, so closing old accounts is a bad idea. Another portion is based on your credit utilization ratio (how much debt is on each account). The utilization ratio item hurts you if you charge more than 25% of your credit limits.
How does all of this information lead around to having too much credit hurting you? If you are not careful, you can end up with a credit report that shows habitual late payments, large balances, a short term credit history, and indebtedness that is mounting out of control. That means you will be denied for future loans and are possibly headed for bankruptcy.