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People utilize credit cards to help meet payments for unexpected financial situations and so that they can fund cash flow requirements. Business owners seek business lines of credit specially underwritten to meet the needs of the business. The reasons for credit utilization vary. The use of credit cards with high limits for good borrowers can:
- Simplify bookkeeping
- Fund operating expenses
- Finance large capital expenditures
- Generate rewards for using the credit card
There are a lot of benefits offered with a credit card, but first you need to determine what good credit is. Every lender has their set of requirements for credit cards with high limits for good credit. In terms of a FICO score, a score that is over 700 is determined to be good.
Lower credit scores mean bad credit but can still be offered a credit card. It might require a deposit, points, or some type of collateral. A secure card helps rebuild credit profiles as needed.
Determining Credit Card Limits
A credit card company does not set credit card limits. A credit limit is given to the borrower, which is correlated to their credit history, income, debt-to-income ratios and credit score. In short, the creditworthiness of the borrower is important.
There are credit card companies that have a set of some pre-established limits for the approved applicants. Others will assess how creditworthy the applicant is by completing a detailed evaluation. Credit profiles that are in good standing have better chances of obtaining credit cards that have high limits for good credit, than those who have poor credit profiles.
Credit card limits need to be managed closely because having credit cards with high limits for good credit higher can be tempting to the under-disciplined borrower.
Be sure to not max out your line of credit limits because this can hurt your credit score. There are many components that go into a credit score. One of them is the credit utilization rate. The credit utilization ratio assesses the extent to which a borrower utilizer their credit that is available. If your credit utilization ratio is 30% or higher, you need to have enough liquid assets to pay the balance when your payment is due. If you do not have enough assets, then your credit score could be damaged.
The Benefits of a Credit Card Limit Increase
Increasing someone’s credit card limit may be helpful if you are applying for a mortgage. The reasons is that credit cards with high limits are good credit.
There are several credit cards that offer high limits for good credit. You can research online for reward cards that offer good credit that is readily available. Try to find credit cards that have 0% APR, but those require you to have good or excellent credit profiles. If you have a good credit profile, remember that you can always work on improving it. A good credit score will facilitate qualifying for the credit card that you want with high limits for good credit.
The Bottom Line
A business line of credit can help you with working capital, equipment, inventory and much more. It is a great financial tool to use to manage your business finances. By having a business line of credit borrowers can withdraw the funds anytime as needs arise.
