People only increase the limit on their credit cards when they earn more, so that they can spend more, right? Not necessarily. Increasing your credit limit can also brings with it numerous other benefits. Here are some of them:
1. Improving your credit score
If the amount of credit you use is close to your available credit limit, then your FICO credit score will take a hit. It’s because you might look like someone who’s maxing out his or her cards and having trouble making payments.
Raising your credit limit will take care of this problem. However, this only works if you are responsible and don’t also increase your expenses too much.
2. Protecting your credit score
If you have more expenses, increasing your credit limit is a much better option than getting a new credit card. Getting a new card can affect your credit score, as it shortens the length of your credit history. The longer the credit history, the better the score.
3. Great for emergencies
If something happens and you find yourself in need of additional funds, having a credit limit well in excess of your usual spending amount will allow you pass this hurdle without much stress. But don’t forget that you still need to be responsible and pay back everything you owe on time.
4. It’s makes it easier to get other loans
Credit bureaus like it when they see that you’re not using all your available credit. It makes you look responsible. This will help you get a higher credit score, which in turn will give you a better chance of getting approved for a new credit card, a loan or a mortgage. Not only that, but you’ll also have a better chance of getting lower interest rates.
With great power, comes great responsibility
Increasing your credit limit can be very useful, but only if you’re a responsible credit card user. Be careful not to overspend and make sure to make all your payments on time. Otherwise, these benefits will count for nothing and you’ll end up hurting your credit and losing money.