Is it good to have a high credit limit? This question is about Credit Cards

Is it good to have a high credit limit?

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This question is about Credit Cards

Michael Woods, Member

@mike_woods7 • 09/14/20 This answer was first published on 09/14/20. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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It's good to have a higher credit limit if you need to reduce your credit utilization ratio, want to have a safety net in case of financial emergencies or if you want to earn more rewards.

The credit utilization ratio shows how much of your available credit is actually used. A ratio higher than 30% can hurt your credit score.

The major downfall of having a higher credit limit is that you could spend more, thus increasing your debt and eventually hurting your credit score anyway. If you can't trust yourself to keep your spending in check, don't go for an increase!

Also keep in mind, that most of the time, a credit limit increase comes with a hard pull on your credit, lowering your score for a short period of time.

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