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Improved credit score may positively affect credit card debt

Michigan consumers who are considering applying for credit, such as a mortgage or other loans, will likely realize the importance of a high credit score. There are various ways to improve one’s credit score, though understanding the process is essential. Going about it the wrong way could actually damage the credit score. Care should also be taken to maintain manageable credit card debt while working on increasing the score. A high credit score may ensure better interest rates on loans.

The credit limit on a credit card affects one’s credit score, and having the credit limit increased will raise the credit score. While credit card issuers often automatically increase credit limits on cards with low limits, a consumer has to apply for a higher limit on cards that already have high limits. This is where care should be taken. Every application made for new credit is called a hard pull – or hard application -- and every hard pull reduces one’s credit score.

Although individuals are free to request increased credit limits on their credit cards, it may be a good idea to call the issuer to establish whether such an application will be regarded as a hard pull. Issuers have different rules, and if such a request would be classified as a soft pull, a consumer may go ahead and request a higher credit limit without negatively affecting his or her credit score. Keep in mind that financial details may have to be supplied again, and such an application can be done by phone or online.

Consumers in Michigan who are exasperated and discouraged by overwhelming credit card debt may want to seek guidance in resolving the problem. Those who want almost immediate debt relief may find that the protection of personal bankruptcy may provide the solution. Chapter 7 bankruptcy will discharge most unsecured debts, including credit cards, while also protecting the individual against foreclosures, lawsuits and creditor harassment while the bankruptcy proceedings are pending. Individuals who have a regular income may qualify for Chapter 13 bankruptcy, which involves making payments according to a court-approved payment plan of up to five years in order to resolve debts and retain property.

Source: U.S. News and World Report, "3 Ways to Increase Your Credit Card Spending Limit", Simon Zhen, June 27, 2014

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