Credit Score and Higher Limits
If you are looking for ways to boost your credit score asking for higher limits on your credit card is common advice you might here.
Background on Your Credit Score
First, to understand how higher limits on your credit cards could help your credit score you need to know the credit score formula. When you do you will find that your debt to credit ratio is the second largest portion of your score and by having more available credit you will lower your percentage.
Possible Issues with Higher Limits
There definitely should be some caution with higher limits. Chances are that if you are looking to lower your debt to credit ratio is because you are already carrying a high amount of debt. If you have struggled to control your total debt and having higher limits could be a temptation that you really don’t need. Worse is that a possible feeling of accomplishment or being less in debt, this is similar to what happens when a person consolidates debt. You need to know that you are not any better off and you need to have control with these higher limits.
The actual fact is you should be concentrating on paying down the debt you already have, which is no easy matter and it can take time.
The Conclusion to Higher Limits and Credit Score
Well, it will help your overall debt to credit ratio and that is always a bonus for your credit score, but sites like MyFICO put it best; if you don’t need the credit you shouldn’t apply for it.
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Tags: Credit Score
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