Does Credit Limit Increase Request Affect Credit Score?

It is a common concern among the users of credit cards as to whether or not they are likely to have their credit scores lowered when they apply for a credit card limit to be increased. Since credit plays a pivotal role in finances and financial status, consumers naturally wish to learn how various actions can affect their scores.

The short answer is that asking for a higher credit limit does not have to be damaging to your credit rating. This means that when you apply for more available credit, it does not have to hurt your credit score as long as you do not reach the new limit. Surprisingly, it can do the opposite in some situations! Here’s a more in-depth look at how credit limit increase requests work and how they affect scores: Here’s a more in-depth look at how credit limit increase requests work and how they affect scores:

How Does Credit Limit Increase Requests Operate?

You can usually ask for an increase in your limit after every 6-12 months. When deciding upon requests for increasing credit card limits, credit card companies consider account history, reports received from the bureaus, and other information. So, as long as your credit is managed properly – timely payments, low credit card utilization, and so on – the chances are high that you will be approved.

The credit card company may pull a copy of your credit report as part of considering the request to complete a “soft pull. ” Soft pulls are only available for viewing and nothing more. They do not reflect on credit scores. That’s the end of the story as far as credit score is concerned if the limit increase is approved after a soft pull.

But if there is anything that triggers a concern based on the soft inquiry on your credit profile, then the card issuer may perform an official hard inquiry. Hard inquiries can shave off a few points, yet the impact is minimal. As long as the cardholder does not have many recent inquiries, one for a credit limit should not harm a healthy credit score.

Why Higher Limits Are Not Detrimental?

In the following sections, it is pointed out that making a request for a higher limit and being approved will not lead to harm to your score in case only soft inquiries are being used. Even for the hard inquiries that credit card companies make now and then when you apply for a limit increase, there are usually no major concerns. What you do with the higher limit is more important as far as the score is concerned in the long run.

Higher credit limits themselves are not a factor that affects credit scores either negatively or positively. You can have a 50,000 limit with good credit, or, the same limit with bad credit. They respond to your spending and payment patterns not to the total credit limits.

If the charges and balances remain relatively small compared to the new higher limit, it will not harm the credit utilization rate – which is the largest credit scoring factor associated with balances and limits. As for the utilization, it should be below 30% according to the experts to get the best possible scores.

In other words, what is important is not the total credit limit that you have but how you ensure that your monthly charges remain below that stipulated limit and most importantly paying your bills in full and on time.

The Benefits: How Increased Limits Can Help

The act of raising credit limits does not have any direct effect on credit scores, but using the higher limit productively is beneficial. With more available credit, it makes it possible to manage higher credit limits and thereby work towards a better utilization ratio.

For instance, suppose your card has a current credit limit of $ 10,000, and your spending habits mean you carry over a balance of $ 5,000 every month. That is a 50 utilization ratio – significantly above the advised rate. However, if you apply for and are given a 20,000 limit, by continuing to spend at the same level, you will have a ratio of 25. This lower utilization ratio can help improve your credit score if you make timely payments.

Over time regularly raising the credit limits responsibly while increasing the available credit shows that it is possible, and one deserves more credit. This creates favorable payment records with better credit limits. This way it shows lenders that you have moved to the next credit level, so to speak. This kind of responsible use and management of higher limits assists scores over time.

Strategies for the Use of Higher Limits While Preserving Credit Scores

To benefit from higher credit card limits score-wise, be sure to.

Particularly, the balance on cards should not be high so, spread the purchases across the cards.
Clear balances to zero every month if at all possible
Create account alerts for the due dates/credit limits
Only borrow an amount of money that you can repay before the due dates
Never take cash advances from newly raised credit limits

Some Things to Consider

While generally beneficial and not too risky score-wise, some key things to note about credit limit increase requests.

It is possible that when making too many requests within a short interval, it appears like the risks are high.
Extreme demands (such as a request to increase limits twice) may not be granted; and may lead to hard pulls.
Excessive utilization of the enhanced limits can negatively impact the scores and represent the consumer’s inability to use credit responsibly.
Hence, when one makes a payment that has a higher limit, the score is affected a lot more.

The Bottom Line

When managed well, having high credit limits on credit cards is beneficial for credit scores. Higher credit limits alone do no harm to scores, but how you utilize that extra space will benefit or damage your credit depending on consumption and payment habits. As with any financial decision, understand the effects first, make a plan for the management, and act wisely.

Ready to boost your credit score? Call +1 888-804-0104 now for the best credit repair services near you! Our expert team is here to help you achieve financial freedom and improve your credit. Don't wait—get started today!