How to increase credit card limit
Most consumers want to increase their limits in order to either raise their credit scores or improve the buying power. There are two ways you can undertake to increase your credit card limit. You can apply for higher limits on existing credit cards or you can obtain new cards. Which one is better, depends on your specific situation.
If your goal is to drop credit utilization fast and by much, getting a new credit card will work just fine. You must take into account that hard inquiries will affect your credit scores, but that could be totally negligible if you apply carefully and have established credit history. Getting an increase on existing credit card limit can be beneficial since FICO algorithm likes to see existing trade lines improve as time goes by.
On the other hand, many consumers want to be able to charge more on a card that give them cash back, mileage or higher discount the more they spend. Just keep in mind that asking for an increase on existing credit card will often result in hard inquiry, the fact that many miss.
So here are few tips on how to increase credit card limit. First of all, the notion that if you apply for such an increase online, you will not get a hard credit pull, remains yet to be proven. In the best case, it works with some lenders but not the others, so be aware of it. Yet again, I want to reemphasize here, that one hard pull will do literally nothing.
1. Wait for at least 6 months before you apply and use that card constantly. No credit card issuer will increase your credit limit earlier. Needless to say, you must pay on time and follow agreement to the letter. But how to increase credit card limit faster and without requesting it? Try charging the card in question every month, going as high as 85% of credit limit and pay the balance in full monthly. From my experience and that of the people I discuss this topic, by doing so you are demonstrating two things - you need this card and you are very responsible. Remember, the more you charge, the more money a card issuer makes, so as long as you are paying as agreed, they will have no objection and increase your limit. And stop fretting about high utilization factor, because once you get your increase and stop using that credit card for 2 months, utilization ratio goes to zero and your credit score jump will by far outweigh any decrease.
2. Apply online if possible. If not call. Be ready to provide your income, employment and home ownership information again. Your credit report most certainly will be pulled, especially in today economic climate where credit card issuers are charging off bad debt in a pace never seen before, but that is another story.
3. Denied or succeeded, you can ask for a credit increase again, and I would wait for at least 6 months. Some credit issuers, Discover comes to mind, will not do it more frequently, no matter what. Meanwhile you can always shop around for additional credit cards if needed, but with caution. Do not apply for more than 2 credit cards within a month and allow at least 3 weeks in-between.
4. Yes, increase your limit by getting a new credit card or two. FICO calculates credit utilization ratio for each revolving line as well as across all revolving lines present on your credit report. You can always try to add a department store or gas station cards, which often are easier to obtain. They will serve the purpose, as long as they are reported to credit bureaus and most do. Here is the neat trick I perfected years back and a must-do for shopaholics who can not control their spending. I have never been one, but have always thought, it was a perfect way to increase credit rating and score. Get yourself a card from store you hate to shop in or gas station you never use. That should keep your card balances at $0 why pushing your credit scores higher.
Those are the ways how to increase credit card limit, and as you can see, none of them is a rocket science. You can do it, just do not spend yourself in troubles.
Sun Mar 14, 2010 10:03AM | Copyright: www.bad-credit-advisor.com | More in Personal Finance | Comments (0)
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