Credit scores are everything when it comes to making large purchases. Not everyone realizes how credit limits can impact their credit scores. You can take control of your credit score today by finding out how credit limits impact credit scores, and then you can work on ways to increase your credit limit to improve your credit score. However, if bankruptcy might be an issue, talk to a Kingsport bankruptcy lawyer for guidance.
HOW CREDIT LIMIT IMPACTS CREDIT SCORE
Almost everyone knows how much credit scores can impact their finances. Low credit scores can place barriers to acquiring loans of various types, credit cards, and insurance. The lower your credit score is, the higher interest rates you could be charged and the fewer deals you could be offered. Some people with low credit scores may be blocked from buying a home or car.
Higher credit scores open up more financial opportunities, benefits, and discounts. This means lower interest rates and more options to choose from financially. Credit scores can be impacted by something called a credit limit. A credit limit is a set limit on how much money you can borrow from a bank or other lender.
Lenders impose credit limits on credit cards based on the borrower’s credit score. A lower credit score often means greater limits on credit card spending. Whereas higher credit scores usually mean a higher credit limit, meaning you can spend more money with your credit card.
Credit limit impacts credit scores too through the credit utilization ratio. This is the sum of all your credit card debt divided by your credit limit. A credit utilization ratio below 30% will have a positive impact on your credit score. Any credit utilization ratio higher than this percentage could hurt your credit score.
WAYS TO INCREASE YOUR CREDIT LIMIT
You might be wondering how to keep your credit utilization ratio low so you can keep your credit score high. This can be done by increasing your credit limit. The higher your credit limit is, the lower your credit utilization ratio is, and the higher your credit score will be.
Common ways to increase credit limits include opening another account or requesting an increase through your creditors. Opening another account could hurt your credit score. Requesting a credit score increase does not, but will require an inquiry from your creditors on your credit history.
This inquiry involves looking at your credit reports. One of the most important things to do is to correct any mistakes that could show up on your credit report before making the request. Fixing any negative components that could hurt your credit on your credit report first is essential. Consider reaching out for financial help with this from a debt counselor or financial advisor.
BANKRUPTCY LAWYER IN KINGSPORT, TN
Realizing you may have to file for bankruptcy can be daunting. Start by contacting us at Tom Bible Law today at (423) 690-7712 for a consultation about your finances. Our legal team of Tennessee bankruptcy attorneys is prepared to help you explore different bankruptcy options. We serve clients in the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.