- I've earned an excellent credit score over the years.
- My low credit utilization ratio is one key reason why.
- My utilization ratio is low because I've consistently requested credit line increases.
My credit score is over 800, and I think this is one big reason why.
My credit score is excellent and has been for a long time. Although it fluctuates, it's well above 800. That means I can generally qualify for affordable loans and have my pick of lenders when applying for a mortgage or a new credit card.
There are a number of reasons why I have such good credit, including my steadfast commitment to always paying my bills on time. But there's one simple move I have made that I think has made a big difference in boosting my score to such a high number. Here's what it is.
This has helped me improve my credit score dramatically
One of the best decisions I made when it comes to earning a good credit score is to regularly request credit line increases every time I have the opportunity.
Card issuers typically let you request credit line increases without a hard credit inquiry, so you don't hurt your score by doing this. You can usually do it online. With my accounts, the option to request one appears every few months or so, and as soon as I see that turn up on my online account, I request an increase.
There's a good reason why I do that. See, while payment history is the most important factor in determining your credit score, your credit utilization ratio is the second key criteria that affects your score. Credit utilization ratio is calculated by dividing credit used by credit available. So, basically, if you had a $100 line of credit and charged $50, you would have a 50% utilization ratio.
If your credit utilization ratio exceeds 30%, it can hurt your score. But if you have a lower ratio, it can help your score. And requesting credit line increases has enabled me to ensure my ratio is always well below 30%.
Here's why requesting credit line increases has been so helpful
I do not carry a balance on my credit cards, so in theory, that should mean my credit utilization ratio would always be very low regardless of how large my credit lines are.
But the problem is, card issuers report your utilization at a specific time in the month that may not correspond to when your bill has been paid. Plus, I'm constantly charging stuff on my cards since I put all my purchases on them to earn rewards. That means, no matter when my card issuer reports my balance to the credit bureaus, I will always have a balance even though I pay my statement in full.
Since I want to make sure that balance is well below 30% of credit available, I've repeatedly asked for credit line increases so I don't have to worry about how much I've spent on my card. I now have a $95,000 line of credit on one card, and $15,000 on another. Since my credit limits are very, very high, I can charge a lot to earn rewards and still have a low utilization ratio that helps out my score.
This is one of the simplest ways to improve your credit score, since it just involves clicking a few buttons. If you see the option to request a credit limit increase on your own accounts, it's likely worth doing.
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