Increase Credit Limit

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When To Increase Your Credit Limit

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Sometimes, timing is everything. While it’s important to know how and why to try the get a credit limit increase, sometimes it is just as important to know when. That is because it can cause a short term dip in your credit score. It can cause the creditor to do a hard credit pull, which will cause that short-term dip.

Don’t worry though – if you get an increase, the better credit utilization percentage will more than make up for that short term dip, giving you a long-term higher score. So, that said, there are a couple times when you should NOT be looking for an increase:

– Not right before you plan to apply for a large loan – If you plan on applying for a mortgage or car loan within the next 6 months to a year, I wouldn’t request an increase. Because of the short term dip in your score, it is possible that it might not be back up by the time you apply for the large loan, and a lower credit score will mean that you are paying more money in interest.

– Not right when you need it – This goes back to the fact that if you are desperate, the creditor will not increase your limit.  If you think there will be a time in the future where you will need that extra credit, the time to request an increase is before that. Obviously, it’s tough to predict, but you have to be able to look ahead as best as possible.

Those are the times that you should not be requesting an increas. So, it stands to reason that if you know you may be applying for a big loan in two years, it might be good to request a credit limit increase, because then it will recover in time to give your credit score a boost.

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