For all of you skeptics out there who believe that you hurt your credit (by a lot) by constantly applying for and at times canceling cards, I just got a letter today from Citibank asking if I want to increase my credit limit on my Citi ThankYou Preferred Card. Sure Citi, thanks.
The email stated the following….
“W’e’re thrilled to let you know that you’re part of a select group invited to request a revolving credit limit increase1 on your Citi ThankYou® Preferred Card. It’s our way of showing you our appreciation for your continued loyalty.
With a higher revolving credit limit, you will enjoy extra purchasing power and increased financial flexibility. It’s easy; simply provide us your current housing and income information to receive an instant response.”
I did follow the instructions and did receive an instant response and Citi upped my credit line by $2200 on the card.
Why did I jump at this offer?
Because gaining more credit lowers my utilization ratio, a factor that makes up 30% of my credit score. Utilization ratio has your total debt in the numerator and your total credit lines in the denominator. The more debt you have as compared to your credit line, the more of a negative effect there is on your credit score (your utilization ratio is higher). So by me getting this extra $2200 in the denominator of my utilization fraction, my utilization ratio will go down and thereby increase my credit score!
Thanks again Citi!