RoxanneControl spending via alerts
You can put a stop to unnecessary spending by setting up email alerts. For instance, if you spend 30 percent of a credit card’s limit, an alert could tell you it’s time to stop. You can then start paying down that balance and use another card.
Add another credit card
Your credit utilization ratio makes up a significant portion of your credit score (30 percent, to be exact). You want to keep it below 30 percent, which can be accomplished by paying down your cards. You can also, however, get new cards to reduce your ratio and increase your available credit.
While adding cards can keep your credit utilization ratio low, don’t apply for them all at once. Getting too many new credit cards in a short period could be a red flag. Since it may indicate financial problems, certain credit score compilers may knock you for it.
Keep your credit cards open
Another way to keep your available credit high and your utilization ratio low is to keep your cards open. Sure, some may have high annual fees, but unless they’re incredibly high, you may be better served saving the card.
If you’re worried about your spending habits spiraling out of control, cut up the cards, but keep the numbers handy. You could use them for occasional online purchases to avoid closure due to inactivity.
Keep your credit cards active
Having a card canceled due to inactivity can negatively impact you in two ways. First, it lowers how much available credit you have, which tampers with your utilization ratio. Second, it can shorten your average credit history.
To stay on top of your cards to avoid unexpected cancellations, put each unused card in an envelope. Write the date you last used it on the outside. When one year since its last use approaches, take it out and make a purchase to keep it active. Pay off that balance, and you’ll be good to go.
Increase your credit limits
You can increase your available credit by merely calling your card issuer and asking for a larger limit. Before doing so, ask your issuer if they will do a hard inquiry. If so, it could decrease your score by some points.
Should you still ask for the credit increase if it results in a hard inquiry? Yes, since a higher limit can decrease your credit utilization ratio, resulting in an even bigger jump to offset any loss.
To play it safe, ask the issuer if you’re likely to get an increase before making a formal request.
Spend less
Another way to keep that ever-important utilization ratio low is to use less credit. Set up a specific limit, say 25 percent of your credit. Once you pass it, move to cash for purchases.
Spend evenly
Each credit card has its own utilization ratio. Use one card too frequently while ignoring others, and you could lower your credit score due to a lack of balance.
An easy way to keep your cards balanced is to employ a maximum usage limit for each. For instance, you could put the max at 20 percent per card. Once one card reaches that limit, put it away, and use the next.
