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I have had the same card for quite some years now, approaching 10. I have requested a few limit increases for the sake of convenience because buying a computer or international airfare tends to be the majority of a smaller limit or in excess.

I do not think I have ever exceeded 50% utilization on the card since this increase and pay the card of monthly, as I have for years.

I last requested an increase over a year ago. I do not really care about what the limit actually is because I only spend money I have with the card whether the limit is $1,000 or if it was $100,000. As a result I have absolutely no fear of running up a large credit card debt.

But reading here recently suggests there is an optimal utilization of <20% of your card balance for credit score, which depending on the month or when the snapshot is taken, I sometimes exceed. Considering this could be a very painless way to increase that score (which is already pretty good, I would think) it seems I might as well apply for another limit increase.

Given all this:

  • Is there any reason why applying for a credit increase is a bad idea for someone in this sort of situation?
  • Also... I'm not single and unlikely to be married in the next few years (so this is not an, ah, unknown liability) :-) – enderland Jun 1 '13 at 13:36
  • If you are paranoid about minor fluctuations in your credit score, you should be worried about the occasional exceedance of the 20% magical number. Otherwise, as long as you are paying off the full balance each month, you should not worry about the fact that every now and then you are exceeding the 20% utilization. Note that having a high credit limit in comparison to your general financial status is also detrimental to your credit score as it sometimes is an indicator of someone who is, or is soon likely to be, overextended. – Dilip Sarwate Jun 1 '13 at 13:53
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    Have you considered a second card with a different company to get more credit? It provides a safety net should an issue with your current credit card occur. (ID theft, disputed charges, lost card, etc) – MrChrister Jun 1 '13 at 16:22
  • @MrChrister I have not previously, no. I do have a debit card with the same bank and a company credit card I could probably use should I get stranded somewhere and if my bank cards did not work for some reason. – enderland Jun 1 '13 at 18:55
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    @MrChrister - long term, great idea. Short term, it drops his average account age which is also a credit score issue. I am 50, but my average account age is 6 years 8 months (a "B" report card score). Companies change, new deals are offered, etc. It all depends on the OP's exact situation. – JTP - Apologise to Monica Jun 1 '13 at 19:21
8

Some aspects of your general financial lifestyle make a big difference in your score. Always pay late; declare bankruptcy; have bills go to collection, these will hurt your overall score.

Some aspects of your life start with a low score and rise over time: the number of years you have had credit.

Some only have short term and transient impacts: what is your utilization rate today; when was your last hard pull.

Any agonizing you do over the transient aspects during a period of time when your score doesn't matter, is a waste of energy. If you are looking for a new mortgage, or a another type of loan, then act in a way that will improve your score. But If you see no immediate need then don't sweat the details.

If your credit limit is too low for your lifestyle, then ask for it to be increased. Just don't ask for the increase a few days before you put in the auto loan application.

7

Your score is real-time, updating every time new data hits the reporting agencies. Dilip is correct, go over 20%, and it will hit the report, but then the score returns to normal after the next bill shows a sub-20% utilization.

Say your average spending is $1000, but your limit is $5000. There's no harm in asking for a small increase in the limit, or simply pay a bit toward the bill before the statement is cut. The bill and reported balance will be lower and your score, unaffected.

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