13

I have had the same card for quite some years now, approaching 10. I have requested a few limit increases for the sake of convenience because buying a computer or international airfare tends to be the majority of a smaller limit or in excess.

I do not think I have ever exceeded 50% utilization on the card since this increase and pay the card of monthly, as I have for years.

I last requested an increase over a year ago. I do not really care about what the limit actually is because I only spend money I have with the card whether the limit is $1,000 or if it was $100,000. As a result I have absolutely no fear of running up a large credit card debt.

But reading here recently suggests there is an optimal utilization of <20% of your card balance for credit score, which depending on the month or when the snapshot is taken, I sometimes exceed. Considering this could be a very painless way to increase that score (which is already pretty good, I would think) it seems I might as well apply for another limit increase.

Given all this:

  • Is there any reason why applying for a credit increase is a bad idea for someone in this sort of situation?
Dheer
  • 57,348
  • 18
  • 89
  • 170
enderland
  • 4,186
  • 2
  • 21
  • 45

2 Answers2

8

Some aspects of your general financial lifestyle make a big difference in your score. Always pay late; declare bankruptcy; have bills go to collection, these will hurt your overall score.

Some aspects of your life start with a low score and rise over time: the number of years you have had credit.

Some only have short term and transient impacts: what is your utilization rate today; when was your last hard pull.

Any agonizing you do over the transient aspects during a period of time when your score doesn't matter, is a waste of energy. If you are looking for a new mortgage, or a another type of loan, then act in a way that will improve your score. But If you see no immediate need then don't sweat the details.

If your credit limit is too low for your lifestyle, then ask for it to be increased. Just don't ask for the increase a few days before you put in the auto loan application.

mhoran_psprep
  • 148,961
  • 16
  • 203
  • 418
7

Your score is real-time, updating every time new data hits the reporting agencies. Dilip is correct, go over 20%, and it will hit the report, but then the score returns to normal after the next bill shows a sub-20% utilization.

Say your average spending is $1000, but your limit is $5000. There's no harm in asking for a small increase in the limit, or simply pay a bit toward the bill before the statement is cut. The bill and reported balance will be lower and your score, unaffected.

JoeTaxpayer
  • 172,694
  • 34
  • 299
  • 561