Is Improving Your Credit Score As Simple As Asking for a Credit Limit Increase?

Improving your credit score is not as simple as paying your bills on time. People who have consistently been employed since they reached adulthood and have never borrowed money typically do not have enough of a credit history to get an unsecured loan or unsecured credit card; if they can get one at all, the amount they can borrow is usually modest, and the interest rate is usually high. Your credit score is not simply a numerical representation of your overall financial health. It shows your record of borrowing money and repaying it. The more lenders are willing to lend you, and the less of that money you still owe, the better your credit score is. When people start building their credit, they start with a credit card with a low credit limit. Over time, you can ask the credit card issuer to increase the credit limit. Sometimes credit card issuers unilaterally increase the credit limit. For help getting a credit limit increase or making the most of the credit limit increase you have received, contact a Philadelphia debt relief lawyer.

The Less You Need a Credit Limit Increase, the More Beneficial It Is

If you ask for a credit limit increase and get one, this is one of the easiest ways that you can improve your credit score. Yes, it requires the credit card issuer to do a hard pull of your credit report, but if the credit card issuer approves your request and increases the credit limit, this lowers your debt utilization. The lower debt utilization offsets the reduction in credit score that you might incur from the hard pull of your credit report.

The danger of getting a credit limit increase is that you can be tempted to make purchases you can afford. If you request a credit limit increase without a clear plan for how to repay it, you will eventually end up maxed out, with increasing interest charges. It is the bourgeois version of playing Tetris with buy now pay later (BNPL) purchases.

If you request a credit limit increase on a card that is already maxed out, then you get the hard pull of your credit report, followed by a rejection of your credit limit increase request. This will be a negative mark on your credit score which will make it difficult to borrow more money until you have paid down some of your credit card debt. Therefore, the best time to get a credit limit increase is when you don’t need one. The ideal credit limit increase is one that the credit card company issues to you without you asking for it, and you do not charge purchases beyond your old credit limit for multiple billing cycles.

Contact CONSUMERLAWPA.com About Building Your Credit Score

A Philadelphia consumer law attorney can help if you have a credit card and need to increase your credit limit.  Contact CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

scotiabank.com/ca/en/personal/advice-plus/features/posts.credit-card-limit-increase-pros-cons.html