Can asking for an increase in my limit hurt my credit score?

What goes into evaluating your credit score can be confusing. Everything from the length of your credit history, to your debt-to-credit ratio, to how many times your credit report has been pulled by credit issuers can be taken into account in the determination of your score. If you want advice on how to better handle credit, members of the Financial Planning Association of Greater Indiana may be able to help you. You can visit their Web site at www.fpagrindiana.org.
Penny C. Lutocka, London Witte & Co.

Your credit score is a tool used by lenders to evaluate your credit report and estimate your credit risk.
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A high credit score allows you to borrow money at the best rate.

Asking for an increase in your credit limit will not hurt your credit score for the short term.

It actually will lower your credit-utilization ratio -- your total used credit in relation to your total available credit. The lower the ratio, the more positive an impact on your credit score.

However, if you qualify for the increase and then borrow on it, this could potentially hurt your score.

Other factors that affect your credit score are:

» Payment history.

» Amounts owed.

» Length of credit history.

» Types of credit in use.

Here are some other ways to improve your credit score:

» Pay your bills on time.

» If you have missed payments, get current and stay current.

» Maintain low balances on credit cards.

» Pay off debt, rather than just moving it between cards.

» Improving your credit score has many benefits. It can:

» Lower your interest rates.

» Speed up your credit approvals.

» Provide better credit-card, auto loan and mortgage offers.

The primary reason for increasing your credit limit should not be to increase your credit score. The general rule is to apply for credit only when you need it.

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