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I have received a letter from my credit card company increasing my credit line and when I spoke about this with a co-worker, they told me that I should request that the company does not increase my credit limit because it was bad for when I want to get a mortgage. I have low credit utilization which I think is strengthening my score. I pay my balance in full usually the same month that the balance accumulated.

How does having an increased credit line effect when I want to take out a mortgage? Does it mean I pay more on the mortgage?

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Your coworker is mistaken. A higher credit line is fine especially if you have zero balance. If you happen to carry a balance at the time of mortgage application, then a higher credit line will mean you have a lower utilization. A lower utilization will mean that your credit score will be better than if you had a higher utilization.

I know someone who just got a mortgage for 3.65% with a DTI of 41%, one late payment from two years ago and a short sale on their credit report. With what you are telling us, your mortgage application should not be a problem. Ensure you have adequate reserves (3-6 months of income) either in your bank account or 401k.

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    I have one caveat: don't ask for an increase. That could make the lender nervous. They don't like to see somebody trying to sneak in new credit lines in the middle of the mortgage process. – mhoran_psprep Sep 16 '14 at 21:27
  • @mhoran_psprep: Yes, I specifically was referring to pre-application and pre-underwriting. – Brian Sep 17 '14 at 12:11

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