Is there an Advantage to Exceeding Your Credit Limit?

Time and again you’ve been warned against the perils and disadvantages of spending beyond your means. But did you know that there are instances wherein going over your credit limit can prove to be advantageous for the improvement of your credit score?

Follow the guidelines below to find out how:

Bring down your credit utilization to increase your credit score

Your credit report will reflect negative records if the amount of credit used is close to the total amount of credit available to you. This is because you run the risk exceeding your credit limit and may encounter problems when you begin settling the bill. For instance, a $2000 credit limit with a monthly bill of around $1800 means usage of 90% of your credit. This might lead to lowering your credit score.

Affordable and easy way to attain loans and credit

When an individual doesn’t max out all the available credit, it implies the card holder’s financial responsibility. This then reflects really well on your credit report, leading to higher possibility of being approved for a credit card, car loan or mortgage, on top of better interest rates and more manageable financial terms.

Access to emergency funds

Having a credit limit more than the usual spending amount will be a useful resource in times of need or emergency. A clear example would be when one is travelling and you need to immediately book a ticket back home. Using a credit card would prove to be immensely more convenient and more efficient.

Increasing rewards

When paying off credit card bills, remember to do so without using another credit card. Paying for recurring expenses on your credit cards will not cost you anything.

Avoid denting credit report

Getting another credit card can be a way to have more credit, butit’s better toenhance your limit on an existing card. It is said that opening a new credit card canlower credit score. Opening a new account cuts the length of credit history, while a longer history means a better grade. The average age of all your accounts play role in your credit history and have around 15% impact on your score.