I had a very financially astute reason for getting my first credit card: it was freshman orientation day at college, and one of the banks was giving away free t-shirts to new credit card customers. When I signed into the card's website to pay my first bill, I noticed a "request credit limit increase" button. I pressed that button several times over the next few months, because I figured it would be good to have access to money in case some kind of emergency arose.
I was probably able to raise my limit six or seven times before the system finally told me that I'd have to call a human being to get it increased further. (I didn't call.) No emergency ever came up, and I never use all that credit. I think I've gone over 50% of my credit limit a total of one time since the card has been open.
As I mentioned in my previous question, a banker recently suggested that I carry a small balance on my credit cards, and that the optimal amount to carry per card is proportional to the card's credit limit. Later in the conversation, she said that it might be a good idea to call my credit card company and ask for a reduction in my credit limit, both to reduce that optimal amount and to prevent me from getting hurt by having too much unused credit available.
I've just been looking into this, and found some contradictory information. According to credit.com:
"No, there's nothing about having a lot of credit available that can hurt your score," says Paperno. "In fact, all other things being equal, more revolving credit availability can, for some, mean a lower credit utilization ratio (balances compared to credit limits), which can actually help the credit score."
So if your credit card issuers have been especially generous with your credit limits, don't worry that those high limits will tank your scores.
So, who's right here? Are the "too much total credit available" and "not using a big enough percentage of your available credit" situations potentially damaging? If so, how much? Either way, why?