NEW YORK (MainStreet) — You don't actually have to need a credit limit increase to make getting one a good idea. Increasing your credit limit can increase your total available credit, which will in turn lower your credit utilization ratio. But how do you go about getting your credit limit increased? If you do increase it, are there any negative consequences for your credit? For those who have been thinking about getting a credit limit increase, here’s how to know if the time is right for you.
Should You Apply for an Increased Credit Limit?
Mike Sullivan, director of education with Take Charge America notes that increasing your credit isn't the worst thing you can do. It will lower your overall utilization. Still, he recommends that you only increase your credit limit when you actually need to for a specific reason. He cites taking a new job with more travel as a good reason to increase your credit.
Still, you don't want to ask for more credit if you don't think your credit will improve. "At the time you ask for an increase, your credit should be so good that there's no question that you'll get it," Sullivan said. This is because when you ask for a credit limit increase, there’s going to be a hard inquiry into your credit. That's not the worst thing that can happen to your credit. But it will have a negative impact. You don’t want that negative impact to be for naught. In FICO score terms, Sullivan thinks around 720 is where you're almost certain to get a credit limit increase.