The Benefits of Raising Your Credit Limit
Though not an ideal move for all consumers with a credit card, there are many cardholders who will come to a point where they feel a higher credit limit is something they can handle. The benefits of having your credit limit increased are numerous.
Credit Utilization Goes Down, Credit Scores Go Up
By having your limit increased, you will see two things happen. First, your credit utilization ratio will go down, which is good, as it means you’re using less of your available limit. Second, the dip in credit utilization means your score should bump up as long as you keep making similar payments and paying balances on time and in full each month.
Helps In the Event of an Emergency
In addition to aiding your credit standing, having more room in your credit limit can allow for some breathing room financially should an emergency pop up. From making necessary last-minute travel arrangements to paying for car repairs after a breakdown, having a higher credit limit can prove helpful to you.
Easier to Get a Loan and Other Credit Cards
One of the major benefits of getting a hike in your credit limit is that doing so can help you in securing a loan and additional credit cards. Using an appropriate amount of your available credit – around 20 to 30 percent – shows the credit bureaus you’re a safe bet when it comes to credit. Therefore, it makes you look good when you qualify for other loans, such as a mortgage.
There are certain circumstances where it’s good to ask for your limit to be raised. Just be sure it’s the right move for you. Look over your personal finances closely to know if it is the right move, and in particular, how you use your credit card.