There are several little-known benefits that come with a credit limit increase
Let’s kick things off with the obvious benefit of a credit limit increase – you suddenly have even more spending power at your disposal (hopefully you’ll use it wisely).
However, outside of that very obvious fact, there are a number of little-known benefits that some financial experts don’t talk about because they’re not keen on recommending sources of borrowed money.
Today we’re making an argument FOR getting a credit limit increase with some key points your financial advisor is unlikely to tell you about. Of course, we will balance things out by explaining some of the pratfalls you face with a credit limit increase.
Ready for this? Here we go:
Credit Limit Benefit #1 – Cashflow 911
No matter how much of a planner you happen to be, you never know when things can take a sudden turn for the worst. What if your house were to (God forbid) burn to the ground? Sure, it’s great that your friends and family will let you stay with them until you get re-housed…
…but what about clothing? All you’ve got left is what you had on at the time? Those are the types of emergencies you want to be able to handle fast and a credit limit increase is the key to making that happen.
Credit Limit Benefit #2 – Score Protection
If there’s one thing lenders really don’t like seeing it’s requests for more credit. They don’t like seeing a consumer rack up multiple sources of borrowed cash that could potentially lead to trouble by way of a debt that can’t be adequately repaid.
By getting a credit limit increase on your existing card, you can sidestep any marks on your credit report. This extends your credit history, which looks better overall. Just this factor alone can account for up to 15% of your credit score.
Credit Limit Benefit #3 – Max out those rewards
Pretty much all credit cards come with rewards these days and a credit limit increase allows you to benefit from these to the max. How?
Start with bills. You have to pay them each month anyhow. Why pay with cash and not really get anything out of it, when you can pay with your credit card, then immediately settle the balance and get benefits as a result?
Same with common expenses such as groceries and gas. So long as you DO NOT carry a limit on your card and you stay within budget and repay the balance you incur for these purchases, you’ll reap more rewards.
Credit Limit Benefit #4 – Increases Your Credit Score
The way it works is this: credit bureaus ding your credit score when you’re too close to your limit. Example: if your card has a limit of $2500 and you’re always carrying a balance of $2400, that’s when you get dinged – because you don’t have what they deem to be enough spending power.
When you get a credit increase, you instantly push past that glass ceiling and improve your credit score simply by NOT touching the additional space on your credit card.
And there you have it – there’s nothing special or complicated about it. Credit limit increases help in small, practical ways and by using common sense. So if you’ve been doing a good job with your existing card, now might be a good time to request an increase.
