Improving Your Credit Score By Increasing Your Credit Limit

Improving Your Credit Score by Increasing Your Credit Limit

A good credit score is a major cause when it comes to obtaining any type of major financial backing. Whether you’re trying to get a mortgage, student loan, personal loan, getting a car, or any type of credit, your credit report will be the first thing that lenders will look at. The better the score you have, the better the monthly interest rates will be and the better chances you will have at obtaining credit. If your credit score is below the standard recommendation, you will have incredibly high interest rates, if your able to get credit at all. If you already have a poor credit score, you’re probably looking for a way to raise your score quickly without having to wait months or years to do it. Fortunately, there is a way to raise your score within just a few weeks, by utilizing the credit cards that are already sitting in your wallet.

Individual Credit Card Increase

Increasing your credit limit for a better credit score is one of the easiest and quickest ways to boost your credit score. This is because one of the biggest impacts on your credit score is the utilization ratio of your available credit. For example, if your credit card has a $1000 credit limit and are using all of it, you will have 100% utilization and that’s frowned upon in the credit scoring world. The lower utilization rate you have, the better your score will be because it shows your able to keep up financial stability. Ideally, you should only use up to 20% utilization of your available credit or less. This means if you have a $1000 credit limit, you would want to keep the balance down to at least $200 or less.

When you have a higher than recommended utilization on your credit card, you can get a credit limit increase which will lower your utilization on that particular card. This lower utilization will increase your credit score almost instantly. However, it is important not to take advantage of the credit increase by spending more than normal. You will need to continue to restrict your usage to 20% utilization and continue to pay your bills on time. All of these factors will drastically impact your score.

All Over Utilization

You should use the credit limit increase method for all of your qualified credit cards including a secured card, which will improve your score even further. Credit reports are tricky and they use multiple methods to decide how your score will look. Aside from utilization from a specific credit source, i.e. a credit card, it will rate your score based on all of your available credit and your over all utilization. If you have two cards with good utilization and five that you’ve maxed out, your score won’t be as high as it could.

In addition, when financial institutions look at your report, they will see that your debt to income ratio is lower. This is the amount of debt you have accumulated compare to the income you have coming in. You want to make sure you have more money coming in than you have going out. However, if you increase your credit limit on each of your cards and keep the usage down, your individual credit source utilization and your overall utilization will be at the recommended rate; ultimately increasing your credit score within just a matter of weeks.

How to Increase Your Score

Getting a credit card limit increase is a fairly simple and easy process. If you already have a low credit score, this method is also a good offer because it will not hurt your score to request a credit increase. You can choose to do it by either email or by telephone, i would recommend doing so by phone as it is more personal. In addition, many credit companies offer several offers to their customers online. This allows customers who are continuously paying on time the opportunity to increase their limits online. Keep in mind that a credit card limit increase is given depending on a few key factors:

  • On time payments with current card holder
  • Current on time payments on another card company
  • Never going over your credit limit
  • No recent charge off or default on bank loans

If you were able to keep your card in good standing, a credit increase shouldn’t be a problem. Simply speak with card issuer about increasing your and state the positive history you have had with them. Always be courteous and polite, please and thank you can go a long way. Should you be approved, your limit is typically available by the next business day, but it can sometimes take up to a whole billing cycle before it’s available.

Some companies may need you to sign documents stating you agree to your credit card terms if you’re approved, as well as give you an explanation as to why you were not granted an increase. If some of your best credit accounts do not qualify because of bad payment history, you shouldn’t close them because you can possibly raise your limits in the future.

More so, if you need help or info on how to ask for a credit limit, there are several YouTube videos you can view that will tell you how to do so and give you advice on the best ways to do it. You can follow the videos for future reference and even comment on the videos for questions you have. If you need more detailed information you can check out these Guides full of useful information.

Additionally, do not forget to pull your credit report once a creditor approves of your increase. This will give you an idea about where your credit stands. You can get a free credit report once every year from Equifax, TransUnion, and Experian.

Final Note

Increasing your credit score doesn’t have to take years of waiting and missing out on the loans or cash that you need. A credit limit increase can give you that extra boost in your score that you need for those big financial decisions. If you would like more information on repairing your own credit, you can visit Credit Repair Kings, they will answer any question you have and point you in the right direction. You will also have access to articles, tips, and helpful service that cannot be found anywhere else.

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