In the eyes of an auto loan officer, which applicant is lower risk? What about a mortgage?
Two applicants have identical financial obligations, income, credit utilization and credit files; all that differs is their total available credit.
Applicant A has one card with a credit limit of $10000, and owes $100.
Applicant B has one card with a credit limit of $1000, and owes $10.
This question isn't about credit score, but about what lenders look at when deciding to approve or deny a new line of credit, such as a mortgage or car loan.
I did a little research, and it appears that there is a variety of conflicting advice on this topic. For example:
This article explains that it's a myth: Myth: Too much available credit hurts home loan
This StackExchange answer says otherwise, but relates specifically to applying for a new card, as opposed to an installment loan like a mortgage or auto loan.
This mortgage site advises that it's possible to have "too much credit", but it doesn't specifically say that it reflects negatively to lenders.
A bit of background: I'm in the process of "building my credit" and trying to decide if it's a good idea to get a credit line increase. I won't need to apply for new credit for at least 2 years, so I'm not at all worried about the hard inquiry. I will be buying a new car in about 3-4 years, and possibly a house in 10-15.