How To Boost Your Credit Score By Raising Your Credit Card Limits
Posted by: Staff Writer | Jul 21,2007
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It almost sounds too easy to be true. I can raise my credit score just by making a few phone calls and asking my credit card companies to raise my limits?
Yes. Here's how it works.
Part of your credit score is based on how much credit you have available versus how much you use. In other words, the way you look best is to have credit available that you don't use. This demonstrates trustworthiness when it comes to how you behave with debt. Generally, your credit card balance should be 40 percent of your overall limit, so if you raise your credit limit, your existing balance will be a smaller percentage of your overall credit limit.
A Few Phone Calls to Your Creditors
All you have to do is call your credit card companies. If you've been a good customer for at least a year, you've not missed any payments or been late, you probably will have no problem in getting your credit limit raised. If you can have your credit raised enough so that the amount of debt you're carrying on average is now a considerable lesser percentage of your overall credit, you will raise your credit score. Even if you don't have the greatest payment history, a credit card company may agree to raise your limit. After all, a higher limit means that you'll have more spending room, and one thing is certain: credit card companies want you to use your cards as much as possible.
First Problem with Higher Credit Limits
While this is an easy way to raise your credit score, there are two potential areas of concern to be aware of. The first has to do with another area that affects your credit score - credit inquiries. When you ask your credit card company to raise your credit limit, they will do a credit inquiry. If you plan to do this with several cards, then you're going to have a number of inquiries popping up on your credit record. This is offset, however, if you make all your calls to the credit card companies within a short period - say two weeks. Then the inquiries are treated as one inquiry and the effect on your credit report is quite small.
Second Problem with Higher Credit Limits
Your second area of concern is that you don't go crazy with your new credit. The idea of raising your limits is to aid your credit score, not to help you redecorate the living room. Incurring more debt will not improve your credit score. If you overuse the credit, you'll just be back to square one. You're better off treating the new higher limit has something reserved for emergencies and not to be used for everyday purchases.
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