The FICO scoring system is very commonly used throughout the U.S., and scores range from 300 to 850. My FICO® Score is an 810 out of a possible 850. Scores above 800 are considered exceptional, and my good score has helped me to qualify for an affordable mortgage as well as my pick of credit cards.
I’ve made a number of moves to earn good credit, including taking obvious steps like paying my credit cards on time. But there’s also one surprising tactic that’s had a huge impact on my score.
This simple move has made a big difference in my credit score
Asking for credit line increases regularly is the unusual step I’ve taken that I believe has gone a long way toward helping me earn a near-perfect credit score.
When you have a credit card, your card company often periodically gives you the option to request a credit line increase. This option usually shows up somewhere when you sign into your online account.
When you select this option and ask for a credit line increase based on an offer from your card issuer to do so, your card issuer doesn’t usually do a hard credit check. Instead, it may ask you a few questions about your income and do a soft inquiry, which does not show up on your credit record.
This means that you won’t be viewed by other card companies, or by the credit reporting bureaus, as having requested new credit. That’s a good thing, since too many inquiries can hurt your score. But you should end up with a larger credit line, which can help your score a lot.
Why does a larger credit line improve your credit score?
Increasing your credit limit is really helpful for your credit score because it affects your credit utilization ratio. Credit utilization ratio is the second most important factor in the FICO credit scoring formula, with only payment history carrying more weight.
Over time, thanks to the fact that I’ve repeatedly requested credit line increases at every possible chance, I ended up with one credit card that has a $90,000 credit limit. I also have several others with $15,000 limits. In other words, I have a ton of available credit.
This matters because credit utilization ratio compares credit used vs. credit available. This ratio should stay below 30% — and ideally be much lower — in order to avoid hurting your credit score. Since I don’t often charge $27,000 on my credit card, it is very easy for me to stay below the recommended utilization ratio at all times. This gives my credit score a big boost.
Now, I do pay off my card in full every month — but since my card issuer reports my balance before the time when I make my payment, having a high credit limit makes a big difference. I don’t need to worry about paying down what I’ve charged before the reporting date. I pretty much know for sure I’m not coming close to hitting 30% of my available credit limit.
If you want to make sure you earn the best credit utilization score possible, and in turn help get on the path toward an 800-plus credit score of your own, check your credit card account regularly. If you see the option to request a credit line increase, take it.
When you have a really high card limit and can charge what you want without hurting your score, you’ll be glad you did. Of course, you’ll still want to pay off your card in full every month to avoid interest, but you’ll know for sure your utilization ratio is always going to help, not hurt, your score — and that’s a big relief.
