Does Requesting a Credit Increase Hurt Your Credit Score?

Depending on whether you request a credit limit increase on your own and the guidelines your credit card issuer follows, you might see a slight dip in your credit score. If your card issuer offers a credit limit increase without you asking for it, your score may go up as your credit utilization goes down. You may consider asking for a credit limit increase if there’s an improvement in your finances and/or if you have good or excellent credit. If your request is denied, determine why it might have happened, and don’t ask for another increase until you take corrective measures.

• How Requesting a Credit Limit Affects Your Score
• When Is the Best Time to Request a Credit Limit Increase?
• How to Request an Increase in Your Credit Limit
• What to Do If Your Request Has Been Denied
• FAQs About Credit Card Limit Increases

Anyone wondering how to get a higher credit limit should take into account the effect it might have on their credit score. This is because it may result in your issuer checking your credit reports, and it will also have a bearing on your credit utilization ratio.

The calculation of your credit score, be it FICO or VantageScore, takes the same factors into account, and each aspect is assigned a percentage. While both scores fall between 300 and 850, the percentages assigned to different factors vary slightly with both models. With the FICO model, new credit accounts for 10%, the amounts owed for 30%, your payment history for 35%, the length of your credit history for 15% and your credit mix for 10%.

When you request a credit limit increase, your lender might conduct a hard inquiry or a soft inquiry on your credit report. In case of a hard pull, it is regarded as an application for new credit and brings your credit score down by a few points temporarily. If you have good or excellent credit and keep your finances on track, the impact will wear off within a few months.

Credit utilization ratio refers to the amount of credit you’ve used from your total available revolving credit. While your credit utilization ratio accounts for 30% in the calculation of your FICO score, it accounts for 20% in your VantageScore score calculation.

Consider this example. You have three credit cards with a combined credit limit of $15,000, and you’ve used $10,000. This puts your credit utilization ratio at 67%. From your credit score point of view, this number should be at 30% or lower. As a result, you’ll ideally need to bring down the amount you owe to below $4,500.

When you get a credit limit increase on a credit card, you may expect an immediate improvement in your credit utilization ratio because your total available credit increases. Let’s carry on with the same example of having three cards with a combined limit of $15,000 and a combined outstanding balance of $10,000. If a credit limit increase on all three cards causes your combined limit to increase to $30,000 and the outstanding balance remains the same, your credit utilization ratio will reduce from 67% to 33%.

While a request for a credit limit increase might have a slightly negative effect on your credit score, you may want to consider asking for one in different circumstances.

If none of these apply in your case, you may want to consider reducing your debt and improving your credit score before requesting a credit limit increase.

It is worth considering if you might qualify for a credit limit increase before you request one. This way, you minimize the possibility of your request being denied. Once you feel you’re in a good position, you may move forward with your request.

Different aspects require your attention if you wish to increase the approval odds of your credit limit increase request. For starters, it’s important that you’ve been making all your payments toward the card in question on time. You may also expect your card issuer to go through your credit report when you request a credit limit increase, either through a hard pull or a soft pull. In both cases, your lender will get an indication of how well you manage your other debt.

If you don’t have good or excellent credit, work on improving your credit score before requesting a credit limit increase. You may do this by making your monthly bill payments on time, bringing down your credit utilization ratio and not applying for new forms of credit in quick succession. Fortunately, improving your credit is possible if you follow the right measures, and this is true even if you’re experiencing poverty.

Credit limit increases happen in two ways. In some cases, credit card issuers automatically increase credit limits. This is typically the case when cardholders demonstrate good credit behavior. The other way is to request an increase on your own. Depending on your card provider, you might be able to submit your request online, over the phone or in person.

When you ask for a credit limit increase, your card issuer might ask you to provide information surrounding your employment status, income and monthly mortgage or rent payments to determine if it should approve your request. It might also take a look at your credit report. If you’re unsure about whether your card provider will carry out a hard or a soft pull, all you have to do is call and ask.

Remember that credit card providers don’t shy away from increasing credit limits as long as they know that borrowers have the ability to make repayments.

Your card provider will consider different factors when reviewing your request for a credit line increase, and if you don’t meet one or more of the card issuer’s criteria, your request may be denied. Common reasons why a credit card issuer might reject a credit limit increase request include:

• You have not held the credit card for long enough.
• You have poor or average creditworthiness.
• You have a high credit utilization ratio.
• You’ve missed one or payments on any of your cards in the preceding 12 months.
• You’ve been making only minimum monthly payments for a while.
• You’ve maintained a high outstanding balance for some time.
• You’ve applied for new credit multiple times in the recent past.
• You do not meet minimum income requirements.
• You use the card minimally.
• You’ve requested a credit limit increase recently.

Your lender might send you an adverse action letter if it denies your request for a credit limit increase, in full or partially. This letter gives you an indication of why your lender rejected your application. You may call your card provider to find out if you have any other options, such as qualifying for a new card.

If your card issuer fails to provide any options, you may consider looking at what other card providers have to offer. What helps is you may even look for good cards based on whether you have bad credit or fair/average credit and wish to improve your credit score.

Now that you know what effect a request for a credit limit increase can have on your credit score, determine if you wish to move forward based on your existing creditworthiness and financial situation. If you feel you might not be eligible, you may benefit by improving your credit first.