How to Increase a Credit Score With Lines of Credit

Caution and planning need to be applied when trying to increase your credit score -- especially if you are using new lines of credit. Every time you apply for a loan or increased credit limit, a mark is placed against your credit score. Too many applications in a short space of time will result in your credit score being downgraded, the very opposite of what you are trying to achieve. Lenders get nervous about multiple applications because it indicates a possible financial problem.

With forethought and careful planning, there are several ways to successfully improve your credit score by utilizing lines of credit.

Instructions

1

Use your current lines of credit to increase your credit score. Check your available balances and choose the card that you use frequently and that has at least 25% of available credit. Ways to apply are online, by telephone or mail. Applying online is the quickest method, and some card lenders will give you an instant decision.

2

You will generally be asked how much you want to increase your limit and why. It is best to ask for an increase of no more than 50% of your current credit limit. For example, if you have a limit of $3,000, don't ask for more than an extra $1,500. Know why you want an increase; maybe a family vacation or a large purchase. Remember, you don't have to use the increase. The higher the difference between your credit limit and your unused credit, the more your credit score will increase.

3

Applying online may mean that your lender will not access your credit file to assess your status because they already have your personal details and history. This means that you will not receive a mark for applying, which leaves you able to apply to someone else to increase your limit without appearing to have multiple requests. Most online facilities will inform you before you "click" to increase your limit that a credit search will be performed. If they do, try another lender first.

4

Don't close card accounts simply because you never use them. If you have a selection of cards operating properly, your credit score will increase.

Manage the use of your cards. Use one for a while, then switch to another and so on. But make sure you stay well within your credit limit. Lenders like to see your cards used, even if only for small purchases. The more you use your cards, the greater the chances of improving your score.

5

Paying off an existing loan that is close to completion is beneficial. This gets marked on your credit file as "satisfied." Lenders like this. Once done, you can apply for another loan, possibly at preferential interest rates. Your chances of being approved are high, and this will result in an increase in your credit score.