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Question By
AntonNi

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Should I raise my credit limit (if I don't need it) to improve the score?
Hi CK,

My credit history is less than one year old. I started it with a secured CC, then added an unsecured one.
Now I went through an app-o-rama, bought a car with a loan, got two more credit cards.

I don't buy anything that I can't afford, don't roll the balance on the cards. I'm only trying to maximize my credit score to buy a house or maybe starting a small business.

The limits on the cards are very low (1000, 1500, 400, 1200), but I don't use more than 10%.

Should I increase the limits on my CCs to improve the score? The utilization in procents won't change, I'll be below 10% anyway. Will bigger overall CC limit increase my credit score?

Thank you!

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Raising a credit limit on a credit card may help raise your credit score, but not in all cases. If you already keep your credit card utilization under 10%, then I would only expect a modest increase (perhaps 5-15 points) if any at all. You could use CK's credit score simulator to check for yourself and see if your credit score could rise off of a credit line increase.

Reply by
AntonNi

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tg,

When I'm running the CK simulator it says:

Good news...

Because you decreased your overall utilization, your credit score is likely to improve.

So it doesn't provide any answer, because I won't decrease the utilization.

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Reply by
tg101688

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Well, at the very least you would be increasing your overall buying power so long as you can afford to pay it back.

Reply by
AntonNi

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Unless I decide to leverage credit for a kind of invesment (house or business), my buying power is my checking account :)

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with a credit history that is less than one year old, leave your credit limits alone they will increase in time. Give it a few years ( yeah, you and others might not like waiting the time, but your credit history and credit score take time. )

Challange, Keep your total Utilization under 5%,

Start Savings Account for your House Fund. Put as much as you can into that account.

As for starting a small business, Never Charge anything for the business on your CC's. It would be to easy to get deep in debt.

Good Luck, Time is on your side.

Reply by
AntonNi

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icuhowie, thanks for your input.

Are you saying that all CC companies will increase my limits without me asking so I should leave it to them?

Why 5%? I thought 10% is a good point, some recommend going up to 20%.

My savings are fine, but I will need the mortgage anyway, so I need the best possible credit score when I'm ready.

I didn't mean to use CCs to pay for business expenses. Not sure how it works exactly, but I expect to be asked to sign personally if I'll need a loan for the business, at least the first one, this is where the credit score comes into play.

Meanwhile I opened two CD accounts. Found some information that these are reported to bureaus as well, I'll test this theory, won't hurt anyway.

I have some time on my hands, but this credit building process is so slow, I guess I better start early and strong.

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Reply by
icuhowie

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A lot of CC companies will increase your credit limit over time. Not sure why so many people want to force the CLI and get Hard Inquire.
The 5% is a challenge. There is no need to carry any of the CC’s with you. All of our CC’s are tucked away and only come out if we want to use one of them otherwise it’s all debt card transactions.
Great job and keep on saving! Also take some time and listen to Dave Ramsey, I’m not a 100% into the Ramsey way, but I do like some of his ideas and giving up the CC’s is not one of them, but being debt free is.
I have some time on my hands, but this credit building process is so slow, I guess I better start early and strong.
Yes you do have lots of time, Years and Years to work on your Credit history and Credit Score.

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