Well...these credit line questions are all over, but I need a little more clarification. I just got notification that my citicard account is able to be increased from $10,000 to $12,000. I currently have $1,000 balance on the card and will pay that off by the end of the year. I use my card only about 6-8 times a year for big purchases, (plasma's, surround sound, computers, etc.) and I pay off the card within a couple months after. What are the pros and cons of increasing my limit, and what would be in the best interest of my credit score, and the ability for me in the future to get good rates for home loans, car loans, etc.
2007-11-13 15:43:18 · 5 answers · asked by Terry G 1 in Business & Finance ➔ Credit
And now for the real answer, but before I do, let me show you how your score breaks down:
1. Payment history-35%
2. Total debt owed to available credit ratio-30%
3. Length of time establishing credit-15%
4. Inquiries and New accounts-10%
5. Types of credit established-10%
Now...to answer your question...
Yes, by all means, get the increase. It's good to have as much of a cushion between the debt you owe in all and your combined available credit on all your credit cards. The pro's would be more to spend, a higher credit score (see #2 above), while the con's would be more to spend (if you're not responsible). In truth, the pros far outweigh the cons. It's good that you have a low balance on the card at any given time, I wouldn't spend any more than 20-25% of your available credit.
But to recap, getting the limit increase would give a big boost to your score, as long as you keep the balances no more than 30%.
Good luck!
2007-11-14 01:37:41 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It could go either way. If you already have a lot of other cards or even a few with high limits (even if you aren't using them), then you might be viewed as having "too much available credit". If you don't have a lot of other cards then that would not be a problem. I don't think the FICO system takes too much credit into account, but some lenders do. The risk they see is that you could max out all of your cards one day and then even claim bankrupcy. On the other hand it could increase your debt to available credit ratio if you are carrying debt in other places. It really depends on your spending habits.
2007-11-14 01:24:01 · answer #2 · answered by Anonymous · 1⤊ 0⤋
Your best interest would be to get the increase. You don't necessarily have to max out the credit card, rather having a larger credit limit shows other lenders that previous/current lenders (in this case Citi), trust you enough to lend you that amount. I would suggest you keep your current strategy-making large purchases and paying off in a few months. It'll improve your credit score, having a larger limit-potential for lower rates on car loans or mortgages.
2007-11-14 00:07:04 · answer #3 · answered by Jim 2 · 0⤊ 0⤋
No you should not. No one needs to have a 10-12000 balance on their credit cards. If you are only using it sporadically and currently only have a 1000 balance, then why do you need to increase the balance? Doing so can eventually get you into a lot of trouble.If you are earning enough money to where you could charge 12 grand and pay it off within a couple months, why not just pay cash?
2007-11-13 23:53:10 · answer #4 · answered by First Lady 7 · 0⤊ 0⤋
yes, you should. This will increase your fico score, it increases your chance for a personal loan from a bank. This is in your best interest.
Only do this if your good with money and credit, dont increase it if your just going to max out your card. This isn't in your best interest.
You want your credit cards to be paid off each month, do not leave any amount on the card.
good luck
2007-11-14 00:45:27 · answer #5 · answered by evaon 1 · 0⤊ 0⤋