When you see that tempting “request a credit-line increase” message on your credit card statement, it can be very tempting to take advantage of the offer. Before you apply for an increase, however, creditcards.com recommends asking yourself these five questions:
Why do I need a credit-line increase? Do you need an increase to help you finance a large purchase, like a trip or a new fridge, that you’ll be paying off the following month? Or are you spending more than you make and running out of credit? If it’s the latter, an increase is not a smart move and will only land you further in debt.
Can I afford a “hard pull?” When you apply for a credit-line increase, it oftens triggers a hard pull on your credit report - inquiries that are noted on your credit report for two years, and are factored into your credit score for a year, according to FICO. Before you apply for a line increase, contact the credit card company to see if they will do a hard pull, to avoid shaving even a few points off your credit score.
Will an increase help or hurt my credit score? A credit-line increase can help your credit score as it will automatically shrink your credit utilization ratio. However, if you quickly convert the increased line to new debt, then your credit score will suffer.
How much more credit do you really want? Do some soul searching and reality checking to figure out how much credit you can actually afford. Larger limits can tempt you into overspending and damage your long-term financial health.
I hope you found these credit tips helpful. Feel free to contact me if you’d like information about your local real estate market.
My 2 cents: Credit lines are good as long as you keep them available. Never go up to the maximum credit line allowed, pay as much as possible to avoid fees and stay away from them if you have high balances. More credit tips call Marina Sarabia at 954-914-8056
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