My credit score is over 800, and I think this is one of the main reasons.
- I have had an excellent credit score over the years.
- My low credit utilization ratio is one of the key reasons.
- My utilization rate is low because I have constantly requested credit line increases.
My credit score is great and has been for a long time. Although it fluctuates, it’s well above 800. That means I can generally qualify for affordable loans and have my choice of lenders when applying for a mortgage or new credit card.
There are a number of reasons why I have such good credit, including my strong commitment to always paying my bills on time. But there is a simple move I made that I think made a huge difference in increasing my score to such a high number. This is what it is.
This has helped me improve my credit score dramatically.
One of the best decisions I’ve ever made when it comes to getting a good credit score is to request regular credit line increases whenever I get the chance.
Card issuers generally allow you to request credit line increases without a strict credit inquiry, so you don’t hurt your score by doing this. You can usually do this online. With my accounts, the option to request one appears every few months, and as soon as I see it appear in my online account, I request a raise.
There’s a good reason why I do that. You see, while payment history is the most important factor in determining your credit score, your credit utilization ratio is the second key criteria that affects your score. The credit utilization ratio is calculated by dividing the credit used by the credit available. So basically, if you had a $100 line of credit and you charged $50, you would have a 50% utilization rate.
If your credit utilization ratio exceeds 30%, it can hurt your score. But if you have a lower ratio, it can help your score. And requesting increases in the line of credit has allowed me to ensure that my ratio is always well below 30%.
Here’s why requesting credit line increases has been so helpful
I don’t carry a balance on my credit cards, so in theory that should mean that my credit utilization ratio would always be very low, regardless of the size of my lines of credit.
But the problem is that card issuers report your usage at a specific time of the month that may not correspond to when your bill was paid. Also, I am constantly loading things onto my cards as I put all my purchases on them to earn rewards. That means no matter when my card issuer reports my balance to the credit bureaus, I’ll always have a balance even if I pay my statement in full.
Because I want to make sure my balance stays well below 30% of available credit, I’ve repeatedly requested credit line increases so I don’t have to worry about how much I’ve spent on my card. I now have a $95,000 line of credit on one card and $15,000 on another. Since my credit limits are very, very high, I can charge a lot to earn rewards and still have a low utilization rate which helps my score.
This is one of the easiest ways to improve your credit score, as it only involves clicking a few buttons. If you see the option to request a credit limit increase on your own accounts, it’s probably worth doing.
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