Re: Credit Line Increase always good for credit?
10-21-2013 02:22 PM
I think the most important thing is you want to get a mortgage relatively soon. The number one reason to get excellent credit is for your mortgage rate as even fractions of a percent leads to thousands of dollars in the long run.
You already have excellent credit scores. If you don't need more credit I would say hold off on any activity. Even a single hard pull can mean the difference. Furthermore with another year of aging and some old derogs that will be older your age will be longer and your scores likely some what higher.
Usually unused credit doesn't matter that much but these days getting a mortgage is more than just a FICO score. Ie job history, income, other debts...
Once you have a mortgage btw it will also really help your credit score as long as you pay on time.
+1. The HP will hurt you in the short term and you really want to maintain your score until your mortgage is a done deal.
A credit limit increase will help your score to the exent it helps your credit utilization. If you credit utilization is below 10% it will not help at all. There is nothing in the FICO score calculation that gives you points for higher credit limits nor does it deduct points ofr lower credit limits..
The part about Util is true, but I once had a comment on my score that read:
"The available credit on your open revolving accounts is too low.
Having credit available to you is a sign that you are able to manage your finances responsibly. Lenders usually like to see that consumers have a large amount of credit available to them."
I believe that this comment was directed at my Walmart Discover Card which at the time had a limit of $2,800 while all my other accounts had limits of $10,000 or more. This was from a TransUnion report.
In general, higher credit limits are associated with higher credit scores. You can debate whether or not the chicken or egg came first, but the two do correlate. Long-term it would probably be helpful to have a higher credit limit on your accounts, both to your score and to increase the likelyhood of creditors offering you new and higher limits.