QUOTE (OlegP @ Aug 8 2008, 12:46 PM) You can call your bank (the issuer of your line of credit) and request a credit limit increase. Because it is not secured, it works more or less like any credit card. The bank will pull your credit file (hence registering an inquiry) and see your credit score. They might ask you why you need this extra limit, what is your income, etc. Keep in mind that many lenders do not like to increase the initial credit limit until they have had your business for at least 6 months - which allows them to build what they call "on-us credit history". So if you can wait six months, your chances of getting a limit increase will be better at that time.
A good mortgage broker may be able to help you get another unsecured line of credit with a different lender. HSBC frequently offers such credit products, as do Canadian banks (CIBC keeps calling me).
As far as the impact on your credit score, keep in mind that frequent inquiries (lenders pulling your credit bureau file) as you apply for cards, loans, line of credit, mortgages, etc. within 3, 6, and 12 months periods, number of new credit lines opened within last 12 months, and high utilization of your credit products absolutely WILL decrease your credit score. So you don`t want to apply for too many cards, credit lines at once - try to spread it over time, and apply for what you need only.
Also, I would not go over 75% of my credit limit on any given credit product, as it deducts points on your Beacon score. For instance, on your line of credit of $18K, I would not go beyond $13K.
As a general comment, I would add that while financing your purchase with a line of credit is a viable option, it makes positive cash flow so much harder to achieve. If you don`t have a house, your line of credit probably requires that you pay 3% of the balance monthly, which puts further pressure on the cash flow.
Hope this helps.
Oleg Pereslegin
[email protected]
Hi Oleg
Thanks for the advise especially not using up 75 percent of my line of credit, and I will kept that in mind for my credit cards also.
I could wait for 6 months, and I might use the line of credit to pay my REIN membership in full when I join REIN and pay my monthly installment to the line of credit instead to estabalish a history with the bank, and once i paid off the balance with the bank. I would feel better to ask the bank for a line of credit increase when the appropiate time arrives.
The reason why i am inquiring for a line of credit increase, is to assist me to buy my first investment rental property. Basically to get the ball rolling in my real estate investment career, and then have enough rental properties to buy my condo as my new home in the next 2 to 3 yrs, including a new car, and the ability to travel.
Let me know, using my line of credit to purchase my REIN Membership and then pay the monthly installments is a smart move.
Thanks