Everyone is in a hurry these days. Whether it’s a rush to get to work early to make it on time or a rush to get that promotion that you need to nail, there’s always that key moment when you realize you’re behind on your bills. It’s that moment that provides the deadline you need to make your payments on time. Is this the sign that you need to increase your credit limit? We don’t know about you, but we think it is time for your to do that.
Increased Credit Limit comes with Great Benefits
One of the most common questions asked on the Internet today is, “Should I increase my credit limit?” The answer to this question is one of the most difficult to give because it depends on so many factors. But, increasing it also gives you a lot of benefits.
Here are the following benefits that you’ll get when you increase your credit limit:
- It is easier and cheaper to apply for home loans from certified and licensed lenders (similar to a net branching mortgage). When you apply for a credit card, car loan, or mortgage, you can request an increase in your credit limit. This is because credit agencies are obliged by law to give you more credit if you want to borrow more money. This can be a benefit of increasing your limit when you already have a good credit score. In addition to this, a positive credit score allows you to borrow money against any assets that you own, no matter what type of asset they are. If you have a life insurance policy, then you are likely to get a loan against your life insurance as long as you maintain a good credit score (if you are interested, see the relation between loans and life insurance here).
- It lowers the borrower’s credit utilization. Have you ever wanted to increase your credit limit but were concerned about the changes in your utilization? Well, many people have done so, but if you look at past increases in the limit, it’s clear that a lot of people who have increased their credit limit have experienced a decrease in their credit utilization.
- You earn more rewards. Credit cards are a great way to make your purchases more affordable, and some of them, known as rewards credit cards, can help you earn rewards points that can be redeemed to get free stuff. However, it is important to know that if you do not pay your balance in full every month, you can get your credit limit increased, once it has been increased, you can continue to earn rewards points while paying the additional credit card charges.
- It is a great help during unforeseen emergencies. One of the advantages of increasing credit limits is that you gain access to a credit card safety net in case you have a genuine emergency that you can’t pay for with cash. The easiest way to do this is to set up a credit limit that you can’t afford to spend more than in a month because that way, you can always use your credit card to pay for your monthly bills. Even if you have an emergency, you’ll have enough cash left to pay for your expenses, which is often more than enough to cover expenses.
- It prevents you from getting credit score dings. If you want to increase your credit line but are afraid of the repercussions of an increased credit limit, you may want to know the important benefits of increasing your limit. These include not having a credit score ding on your report, protecting your images, and avoiding the risk of having your score drop. A low credit score means that you’re less likely to be approved for a mortgage. However, a high score means that you’re more likely to be approved for it. Say that you want to apply for a mortgage with the Moreira Team- acclaimed as one of the top-rated mortgage companies in ga. Now, if you have a good credit score, chances are that you would secure the finances. Wondering why? A credit score is actually a prediction of how likely you are to pay a loan back on time based on information from your credit reports. So, if the reports show that are punctual while returning money, then nobody would question your credibility. That said, while you can always talk to adverse credit mortgage brokers to find other ways of obtaining the funds you need, it might still be a good idea to ensure that your score stays on the higher side.
- It enables you to make large purchases. Purchasing large items such as a house, a car, or even a laptop can be expensive. Credit cards have such a high limit on them because it allows you to make a large purchase without having to pay interest. If you’re not cautious about reaching your limit, you can end up paying for the next 10 years of interest as well as the money you spent on the item.
You’ve probably heard that taking out a larger credit card limit can help you build your credit and make it easier to qualify for loans in the future. However, there are many factors that determine whether the limit increase is the right move for you. In fact, it’s important to understand some of the negative consequences of a larger credit card limit before you go ahead and make the change.
