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Often consumers can get a bit confused about the right way and the wrong to improve a FICO score. The idea of lowering your limits is just one of those ideas. The idea comes from the rational that lower credit limits means you are a less of a risk to a lender because you can get yourself into trouble borrowing large amounts of credit at any given time. Since you are less likely to get yourself into trouble, the better FICO sore should be. This is wrong way and an incorrect way to think about improving a FICO score. The first reason why this will hurt your chances of getting a good FICO score is the based on the FICO formula itself. 30% of your FICO score is the measurement of how much you owe and more specifically is your utilization. This is found by taking the credit balance and dividing it by the credit limit. The lower the better is the rule and this is what will actually help you get a good FICO score. A lowing a credit limit means you will be dividing how much you owe by a lower number creating a high percentage. If you ask for your credit limits to be lower it has the effect of raising your utilization and damaging your FICO score. The second reason why lowering credit limits might not be a good idea is the fact your FICO score uses your credit history. Meaning it you have done no real method to improve your overall credit standing. You have lower your limits but you have done nothing to the things that really matter such as paying on time and paying off your balances. Lowering limits should never be advised when trying to achieve a good FICO score. Consumers are better off focusing on paying on time and reducing their spending. What a lower limit can do for you is control your spending. If a consumer is struggling to budget and plan a lower limit my make them think twice before buying an unneeded item. Lowering limits could be method from saving you from your spending habits, but is not a method of improving a FICO score.
Article Source: http://www.articlegush.com
To read about the credit score scale visit Kyle’s website. He writes about everything to do with getting a good FICO score.
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