Credit Limit Increases

It is an unpleasant truth that the lending of money ultimately benefits lenders more than it benefits borrowers. Lenders have less to lose when they choose not to lend than borrowers do when they choose not to borrow. If a lender doesn’t lend, they keep the principal of the non-loan and only lose out on the interest they might earn from lending. By contrast, if a borrower doesn’t borrow, they risk falling behind on their payments and incurring late fees or even lawsuits; in the worst-case scenario, creditors might even seize the borrower’s assets or garnish the borrower’s bank accounts. If you are at risk of falling behind on your bills, it is almost certain that you are going to borrow, but the question is from where. In another cruel twist of fate, the more desperate your financial situation is, the riskier and more expensive it is to borrow money. A credit limit increase is one of the least risky ways to get access to additional funds that you will eventually have to repay. If you are considering requesting a credit limit increase, or if a previous credit limit increase eventually made your financial situation worse, contact a Boca Raton credit repair lawyer.

What Could Go Wrong With a Credit Limit Increase?

Gratitude is always a good place to start when thinking about your finances. If you are in the market for a credit limit increase, it means that you already have a credit card. Most credit card issuers will let you request a credit limit increase every six months, so if more than six months have gone by since you last requested one, you are in good shape to ask again. Sometimes the credit card company will offer you a credit limit increase even when you do not ask.

The biggest risk of requesting a credit limit increase is that it involves a hard pull of your credit reports. This has a negative effect on your credit score, although not nearly as big as if you miss a payment on a bill. If the credit card company offers you the credit limit increase without you requesting it, they usually do not do a hard pull.

The Best Time to Get a Credit Limit Increase Is When You Don’t Need One

Another risk of credit limit increases is that it presents an opportunity to incur more debt. The best time to increase your credit limit is when the credit card issuer offers it. Use as little of your newly available credit as possible. This lowers your credit utilization, and a lower credit utilization is good for your credit score. The higher credit limit will still be there when you need it, so keeping it unused for as long as possible is good for your finances.

Work With a Debt Lawyer About Filing for Bankruptcy Protection

A South Florida debt lawyer can help you decide whether all you need to get your finances on the right track is a higher credit limit on your credit card.  Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.

Source:

scotiabank.com/ca/en/personal/advice-plus/features/posts.credit-card-limit-increase-pros-cons.html