Why would a lender raise your credit limit when you're already struggling to keep up?
Credit approval algorithms look at your credit report and payment history, not your entire financial picture. You may be making every minimum payment on time while using a line of credit, cash advance, or buy now pay later plan just to keep up. To the lender, you can look like an ideal customer even while your debt grows every month.
In this episode, Doug Hoyes and Ted Michalos explain how lenders decide who gets more credit, why credit limits can keep increasing, and what happens when the borrowing finally stops.
To learn more about debt relief options, please visit us at Hoyes Michalos Start Exploring Debt Relief in Ontario
They discuss:
• Why being approved for credit doesn't mean you can afford it
• Why lenders offer automatic credit limit increases
• How borrowing to make minimum payments can hide financial trouble
• The warning signs that your debt is becoming unmanageable
• When a consolidation loan can help, and when it can make things worse
• Why your bank account can be at risk if you owe money to the same bank
• How to measure whether your financial situation is actually improving
The key takeaway: don't use a lender's willingness to give you more credit as a measure of your financial health. Look at your total debt, your interest costs, and whether your balances are going up or down.
Debt Free in 30 is hosted by Licensed Insolvency Trustees Doug Hoyes and Ted Michalos of Hoyes Michalos.
Time Stamps:
00:00 Why do lenders keep giving you more credit?
01:16 How lenders decide whether to approve you
02:16 What your lender doesn't know about your finances
03:31 Why credit limits keep increasing
05:01 Should you accept a credit limit increase?
06:44 How lenders encourage you to borrow more
07:42 How the debt cycle begins
10:00 How people accumulate debt while staying current
11:07 Robbing Peter to pay Paul: modern-day kiting
13:12 What happens when the credit finally stops
15:36 Can a consolidation loan help?
16:50 The risk of consolidating credit card debt
19:34 Why your bank account could be at risk
21:21 Warning signs your debt is becoming a problem
23:51 Make a list of your debts
25:47 Look at what you own, too
26:47 Think about interest in hours worked
28:25 The key takeaway
If you need credit card debt help, start by listing every debt, rate and payment — and track your total, not just minimums.
To learn more about debt relief options, please visit us at https://www.hoyes.com
