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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A great article about Free Credit Report and Score. Subscribe to the Free Credit Report and Score blog now to get more updates on free credit report services, check credit online score, and business credit report.

Credit Score: Raising Your FICO Credit Score

Let’s face it, whether you like it or not credit is a fact of life. You can keep the amount of credit cards you have to a minimum and pay cash for everything but unless you have the cash to make all purchases outright - including buying a home - sooner or later you’re going to have to use credit.
Even if you have the cash to buy a home, did you know your credit score can affect the amount you pay for auto insurance, home insurance and all other types of insurance?  Many insurance companies determine risk by using your FICO credit score, this is called a ”credit-based insurance score”. Having a good credit score will lower your insurance costs.
Now that you’re resigned to the fact that credit is going to be a part of your life, why don’t you do what you can to get a higher credit score? Getting a higher credit score will get you better credit card rates, mortgage rates, auto loan rates and insurance rates.
Have you ever wondered how credit scores were determined? There are bascially five factors that affect FICO credit scores and managing these factors appropriately can raise your credit score.

1. Make your payments on time. Your credit payment history counts for 35 percent of your FICO credit score. Negative payment histories will hurt your credit score.  Having a good track record on your payment history will help your credit score.
2. The amount of money you owe compared to your overall credit available also has an impact on credit scoring. The more you owe, the lower your credit score will be. This accounts for 30 percent of your credit score.
3. The length of your credit history accounts for 15 percent of your credit score. The longer your credit history, the more this contributes to your score. Several years ago I closed a department store credit card I hadn’t used in a long time and my credit score dropped about 20 points. That being said, keep your long term account open even if you’re not using the accounts and as long as you’re not paying annual fees.
4. Applying for new credit can affect your credit score. This accounts for 10 percent of credit scores. If you apply for or open many new accounts in a short period of time, this will also affect your score.
5. Other factors contribute about 10 percent of your FICO credit score.  The mix of loans you have will affect your score like credit cards, mortgages and auto loans.

Taking a proactive approach to manage your credit will improve your credit score. You are also entitled to a free credit report annually, although if you want to get your credit score that will cost you.

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A great article about Free Credit Report and Score. Subscribe to the Free Credit Report and Score blog now to get more updates on free credit report services, check credit online score, and business credit report.