Credit card limits area unit like clothes: If you’re not careful, they will quickly become too tiny.
If you’ve outgrown your credit line, hold off before you choose up the phone to provoke a rise. There area unit many belongings you got to perceive 1st, and your request might additionally trigger many actions on the a part of your institution. therefore it pays to be strategic.
If you’ve outgrown your credit line, hold off before you choose up the phone to provoke a rise. There area unit many belongings you got to perceive 1st, and your request might additionally trigger many actions on the a part of your institution. therefore it pays to be strategic.
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If you’re considering job for a credit-line increase, here area unit 5 belongings you got to recognize first:
1. Your credit score. “Before you pick up the phone, you need to check your own credit,” says Bruce McClary, spokesman for the National Foundation for Credit Counseling.
Even though you’re an existing customer, it’s “like asking for a new loan.” So check your credit report (it's free at AnnualCreditReport.com) to see if there are any issues that would hurt your chances.
Also review your credit use, says Ruth Susswein, deputy director of national priorities for Consumer Action. Now add up all your card credit lines and compare that to the total usage from all your cards, because credit scoring formulas look at that, too.
2. Why you ‘need’ a credit-line increase. Do you need a higher limit to
allow for larger items and expenses that you will pay off in full (like
business travel or new appliances for the home)? Or because you’re
reaching for one card consistently, rather than a handful of other cards
that you used to use? “If you’re good with your credit, it can be a
good thing,” he says.
3. If you get an increase, it could affect your credit. So if you get an extra $5,000 added to one credit card line, that’s $5,000 worth of credit you likely won’t be able to get from another lender, he says.
A credit line increase “can, many times, help your credit score,” says Weeks.
Based on your income and assets, there’s only a finite amount of credit that lenders will grant you, no matter how good your history and score, he explains.
If you increase your credit line and keep your usage the same, you automatically shrink the utilization ratio.
4. The issuer will probably pull your credit. Asking for a boost in your
credit limit might trigger a hard pull on your credit report, says
Danielle Fagre Arlowe, senior vice president for the American Financial
Services Association, a trade group for the credit card industry. “Ask your credit card issuer ‘Is this going to trigger a hard pull on my
credit report?’ And they should know,” says Arlowe.
5.How much more credit do you really want? “Have a determination in your own mind,” says McClary.
“You need to do your homework before you have the conversation to know how much you can afford,” McClary says.
“The lender is going to want to offer you whatever they can offer you,” he says.
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