To Increase, or Not to Increase, That is the Question-


Understanding Credit Limits“To be, or not to be…” is what William Shakespeare wrote in his play Hamlet. I ponder, “To increase, or not to increase?” Let me get to the point before you click to the next article. I am referring to increasing your credit limits. Requesting an increase in your credit line is a little known strategy to help you get to a balance of 30% of your credit limit. Were you aware that the optimal balance for the best score is 30% of your credit limit or less?

How do you get to thirty percent? I’m glad you asked. The first thought that comes to mind would be to pay down the debt to 30% of the balance. This is the best option in my opinion. Not only do you reach the optimal threshold to increase your credit score but you eliminate debt at the same time. A win-win or as Charlie Sheen would simply say, “winning!”.

However, there’s more than one way to bake a cake. The other option is to request an increase. Yes, have the credit card company give you access to more of their money. For example, if you have a $5000 credit limit with a balance of $3000, your balance is 60% of your limit. You want to be at 30% or less. Your first option is to pay the debt down to $1500. This is the typical way we think about arriving at that magical percentage. The other option doesn’t require any out of pocket money but you receive the same benefit. Obtain an increase in your credit limit to $10,000. If approved, you are instantly at the magical 30% ‘balance to limit’ threshold that the credit bureaus look for. As a word of caution: KNOW THY SELF! If you follow me on Twitter @creditscore_man you will see that I tweet those three short words often. I say that as a caution to those who would go out and take advantage of the “new found money” and incur more debt. Incurring more credit cards and debt is not the goal. The goal is to get and keep a high credit rating. This strategy is for the responsible among us. So again, KNOW THY SELF!

Another strategy would be to utilize a combination of the 2 options listed above. Obtain an increase and pay down the debt. Let’s say your limit is increased from $5000 to $8000 and your balance is still $3000. At this point your ‘balance to limit’ ratio is thirty-eight percent and you are still above the 30% goal. You would need to pay your debt down just $600 instead of $1500 in the example mentioned earlier. Once you get the increase to $8000 and your balance is reduced to $2400, you have reached the mystical 30% the credit bureaus like to see. Congratulations, your credit score should increase. This needs to be done for each of your credit cards individually or a total of all your limits and balances. An example of how the ‘total’ works looks like this: You have 4-5 credit cards with different credit limits totaling $20,000. Add up all the balances and they should be equal to or lesser than $6,000. If you are over the 30% threshold, devise a plan to pay down your debt. One of the great features of is that they will tell you your credit card utilization percentage or balance to limit ratio for each card and for the total of all your credit cards.

Following this single strategy of lowering your balances and paying your bills on time can lead to the Credit Swagger you desire. Stay tuned…come back for more great reads and tips to help you obtain the best possible credit score.

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  1. WOW you did it again 800 Credit Score Man. This one is always confusing. To pay off or pay down. I was about to pay off now I will pay down so I can go below to 30% and increase my score. When I pay down will that lower my minimum monthly payments? Listen to me talking credit lingo. Again thank you for the understanding. Hey I got a alert of a score increase from Credit Karma thanks for the knowledge. Keep spreading the word so we all can get Credit Swagger…

  2. I have several credit cards but always pay the balance in full each month. Is there any advantage for someone like me to request higher limits on my cards? My score is btwn 725-750.

  3. The key to that is to “Know Thy Self.” If one does not exercise serious discipline, they could end up in a lot of trouble here. Great tip on the magic 30%! I didn’t know that.

  4. I learned this trick off the myfico forums and it did send up my scores. I tell my hubby we have to play their game. Sucks to have to increase credit in my opinion just to get better score. But I watch the % like a hawk!

  5. I had never heard of the 30 percent rule, but am pretty close to hitting that Magic number. This is great info and something I will focus on being at each month. Another strong article.

  6. I learned something new. I never knew about the 30% rule. Very interesting! I have friends who would benefit from this information. Thanks for sharing.

  7. I am really enjoying the articles of how to become swagger with my credit. Thanks for the valuable information.

  8. Didn’t know about the thirty percent threshold. Good tip. I need to be more mindful about the increase or decrease.


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