Should I try and raise my credit limit?

Question

I have a capital one card. My credit limit is only 500 right now and I usually spend about 300 a month on the card. I always pay it off in full, I use it as a debit card more or less. Anyways, this month I have already spend 480 of that 500 limit due to unexpected expenses. Should I try and get my credit limit raised, or will this hurt me in the long run because I only spend about 300 a month. Will it help my credit score to increase my limit even though I don't always spend it all, or would it be better to keep my limit at 500 and just use 300-400 a month? I heard it's best for your score if you use up all the credit you can and then pay it off at the end of the month. Does that really effect your score that much?

Answer 1

As a rule of thumb, you never want to exceed 50% of your available credit. So if your credit limit is $500, you should never carry a balance greater than $250. In the eyes lenders, it looks like you're desperate for credit - or you can't handle your credit responsibly - if you use all of your available credit. This has a negative impact on your credit score.

Definitely call and ask for a credit limit increase (CLI). A CLI will in no way negatively affect your credit score. It may actually help!

Answer 2

Whoever told you that running your card up to the limit is good for your scores is wrong. (but they were right in telling you to pay it off each month)

If your credit limit is $500 and you usually spend somewhere around $300 each month, then you are killing your scores by over utilizing the card.

If that is your only credit card then it makes your over utilization that much worse for your scores.  

You never really want to go over 30% utilization on your card, which would be only charging roughly around $167 or less and paying it off before charging again.

The ideal utilization percentage is 10% or less.

Having low credit limits actually do hurt.

Other creditors see the low limit and believe your card creditor does not feel you are trustworthy of a higher limit.

Just because you have a higher limit does not mean you have to use every bit of it. As I stated above, try to stay below 30% of the total credit limit.

If your credit limit continues to increase over time, it will give you a better opportunity of staying further and further below 30% utilization.

Call Cap One and talk to them about a credit limit increase.

Answer 3

They way I heard it recently, having UNused credit available helps your credit score. So it would help if you raised the limit......as long as you don't use it.

Answer 4

The disadvantages of increasing the credit limit is ,you will physcologically feel to spend more eventually.As of for getting the score,it should not be your motivation.Learn to pay it on time....this will keep your credit score green.