Reader Chris asks,

Would you recommend to use balance transfer in one lump sum but to pay minimum balance every month for 6-12 months or use the maximum limit every month but paying in full to increase future limit for a new immigrant to get into credit card air mileage bonus game?

Which is better and faster to get higher credit limit plus getting good credit rating in US?

First of all, a balance transfer isn’t a strategy for increasing your credit limit. Use the strategy to move high interest credit card debit onto a card offering 0% interest and no balance transfer fee for a promotion period like 12 or 15 months. And only do this if you’ve gotten yourself into trouble. You want to pay down your credit card debt.

Your credit score can be worth millions of miles if you understand how it works but you want to pay off your cards in full each month, or do not play the mileage game with cards.

Carrying a balance on a credit card, especially close to your credit limit, will reduce your score (one factor is ‘utilization’ — the higher the percentage of your total available credit you use each month, the lower your score).

To increase the amount of credit you are extended:

• Use and pay the card off each month
  
• Develop a good credit history – pay your bills on time.
  
• Make more money – so you have the capacity to pay, that’s the number one thing banks are worried about after whether you have a history of actually paying.
  
• Request credit line increases, or better yet apply for new cards and you can even often combine credit lines — eg get Chase to move credit from one card to another before you close a card.

If you don’t have a strong credit history in the U.S., consider:

• Getting a non-rewards card from the financial institution you bank with (that sees your financial activity and holds your assets)
  
• Get a card designed for ex-pats living in the U.S., at various times there have been dedicated offers for customers with this profile for both the British Airways and Virgin Atlantic cards from Chase and Bank of America, respectively.
  
• Start small, and keep trying, little or no credit history 20-somethings get approved for cards all the time with low incomes, mid-career professionals from other countries do too.

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