“Did I Ask for a Raise?”
Oh, if only your boss were as generous as MBNA! I’ve gotten more “raises” from my credit cards — in the form of credit limit increases — than I ever have gotten working. The funny part is, I never requested more borrowing power. I didn’t need those increases. I didn’t even want them.
If you owe only a little bit, bigger credit lines mean that you’re using a smaller fraction of your credit. All that unused credit is good for your FICO score. But the temptation thrown off by excessive amounts of credit is killer for your NETWORTH score.
Tricia @ Blogging Away Debt wrote a few months ago that her credit limits exceed her annual income. Unless you have exceptionally strong willpower, all that available credit is a recipe for disaster.
Why would credit card companies do this? It’s simple. They want to see you in debt up to your eyeballs! To them, it’s a game. It’s like bending a tree branch farther and farther to see how far it can flex without snapping. They assist you in getting deeper and deeper into debt, right up to the point that you snap and go bankrupt.
Don’t let the credit card companies tempt you. If they raise your limit, call the number on the back side of your card and request that your limit be reduced to a lower amount. (Note: Whatever you do, don’t ask to lower your limit to a level where your balance exceeds your credit line!)
Yes, at any given balance, higher limits increase your FICO score. But what good is a higher credit limit if it leads you to a higher balance?
