DOES INCREACING OVERALL CREDIT LIMIT INPROVE CREDIT SCORE

[DIYcredit]

   Hi all. I have a question and maybe someone has an answer.I'm in a Debt Management Program.I still owe $11,000.The two CC accounts that I'm in debt two [Chase and Bank of America]  are closed.I got a new Capital One Quicksilver with a credit limit of $2500 up from $1000.I keep the utilization ratio at about %5 and I pay in full every month .NEVER LATE .
 Scenario #1
 My plan is by the end of next year I should owe about $5000.My cc should have a credit line  about $5000.Then apply for another cc I should get $1000-$5000 and that should increase Debt to Credit Ratio and increase my credit score and show more credit worthlessness..When DMP is finished and I don't owe anything I want to apply for a Discover it cc.
 Scenario #2 
  Is to keep my capital One cc only maybe they wont give me the credit line increases that I think I'll get.Should I forget Sceranio#1 and ask for credit lines increases  if they don't give me credit line increases automatically.And how often? because I don't want to be denied.That will affect my credit score.Maybe if I wait to get cc I'll get approved for more because I'll owe less.

 Does someone  have an idea what I should do?

 My overall goals are:
-Pay back Debt.
-Establish new credit [which I am doing]
-When debt is paid apply for Discover it cc
-2-3 years from now apply for new car  3% apr
-Have credit score of  700-750


   DIYcredit

 

[gdale6]

We really dont discuss DMPs on this site, my best advise to you is to pay off the 2 closed cards ASAP they are most likely killing your utilization, as those balances come down the impact on your score from the utilization percentage will decrease and your FICO will increase. Good luck

[Shokk]

Nothign wrong with doing both.  Get CLI for current card and have a second reporting.  The more credit not being used the better.  You may take a small hit with the new TL reporting, but it will come back up fairly quickly.

[IamB2]

Hi,

In all honesty, I don't know how the DMP works, but personally, I have an issue with closing out a card with a balance, and let alone with as much as $11K in CL. As you are paying down those cards, you will not get the benefit of "released" available credit.

To answer the original question, increasing Credit Limit does help the score overall by way of decreasing the utilization. But, I would focus on paying off the two cards asap and not add additional cards until those two are paid off. Even if you manage to get approved for other cards, your Utilization is in the negative, you would get crappy credit limits and horrible Interest rates.

Available Credit: $2500 (+/- 5% that you allow to report)

Credit Card Usage: $11000

Utilization:440%

Unless I am missing something, my suggestion is to focus all of your attention to paying off your closed cards and then, and only then see about applying for new credit.

[DIYcredit]

  Hi, one of the conditions when entering into a DMP is to close the accounts that I am in debt to.One good point is that one of the conditions is not  to accurate any new credit while in the program,so I guess I'm ahead of the game in that sense.No red flags,no problems.I made the decision after thinking it through and reading the great advice that I'm going to concentrate on paying down my debt and after that applying for more credit cards.                                                       

        Thank you,
        DIYcredit