Ask HTM - Requesting a Credit Limit Increase, Path to Homeownership Considerations, and Biking with Kids #220

Credit Limits

Matt Altmix and Joel Larsgaard explain that asking for a credit limit increase can be beneficial for your credit score. They emphasize that having more available credit while using less of it positively impacts your score. However, they caution that in the current economic climate, credit card companies are more likely to deny such requests.

You probably don't want to call your credit card company asking for a credit limit increase just because they're likely to say no.

--- Joel Larsgaard

Instead, they recommend using your credit cards sparingly and paying off the balance in full each month to keep your accounts active and your credit score healthy 1.

   

Closing Cards

Matt and Joel also discuss scenarios where closing a credit card might be the better option. If you have a tendency to accumulate debt or if the card has an annual fee without offering significant benefits, it might be wise to close it. They compare this to removing temptations, like alcohol, from your environment if you have a drinking problem.

If you have a spending problem, well, it's not a good idea just to keep these cards with high credit limits available to you just sitting around.

--- Matt Altmix

They suggest opting for no-fee cards with good benefits, such as the Citi Double Cash card, to avoid unnecessary costs 2.

   

Managing Credit

The hosts answer listener questions, including one about the impact of credit limit increases on credit scores. They explain that while increasing your credit limit can improve your score, it's essential to manage your credit wisely. Using credit cards responsibly and paying off balances in full are key strategies.

Congrats on paying off your credit card debt. That is awesome.

--- Matt Altmix

They also touch on the importance of keeping credit cards open and active to maintain a healthy credit mix 3.