Will Requesting A Credit Line Increase Affect Credit Score?

Most credit card users ask themselves a question, whether the application for an increase in the credit limit on their credit card will have a negative influence on their credit rating. It is a reasonable question since any change to the credit report can have an impact on the credit score and asking for more available credit will be a change.

The good news is that applying for a higher credit line does not trigger a negative impact on your score as long as you are granted the credit limit. Below is a breakdown of how credit line increase requests work and under what circumstances they could be damaging to credit.

How do Credit Line Increase Requests operate?

Whenever you request the credit card issuer to increase your limit, the bank will pull your credit report and your profile to assess your account. Soft inquiries, also referred to as soft pulls, enable creditors to access your credit report without harming your score. Therefore, basic things like asking for a higher credit limit will not reduce the credit score.

If the bank approves your request, your new higher credit line will be reflected on your credit reports. This also does not affect your scores in any way. Since the credit limit has increased the ratio of credit utilisation which is the amount of credit you are currently using compared to the total credit limit will come down. This can improve your credit score since credit utilization is one of the key drivers of credit score models.

The catch is if the bank says no to your request then nothing will change in your report and zero effect on the score. However, if they do approve more credit and you proceed to charge your card to the limit, your credit rating will be affected. As long as you don’t improve your balances simply because you are allowed to use more of your total credit, having more available credit, can help you to use less of the total credit. This aids in accumulating the score in the course of the process.

When a Credit Limit Increase May Lower Your Credit Score?

Sometimes, asking for a higher credit limit may be damaging to your credit rating in a roundabout way. Here are some examples:

Multiple Requests Each time a bank runs your credit, it is considered an inquiry and can negatively affect your score especially where you have many inquiries in a short duration. Applying for several credit line increases within a couple of months may lead to additional inquiries and a lower score if you receive approval for the higher credit limit. Spacing out applications will help reduce the effect of such occurrences.

Opening a New Card Most credit card companies will grant automatic credit line adjustments depending on card usage over a given period with proper conduct. If they will not budge on your limit, using the card with a fresh one that has a higher limit will afford you better available credit; however, the hard inquiry and the new account offset the advantages that a higher ceiling may offer.

Debt Problems Often, people with high credit card balances on their existing cards or an irregular payment history may see a higher credit limit as the answer. However, cardholders with existing credit problems will be considered high risk by the creditors most of the time. Not only will they likely say no to your request, but now you have another credit check that will knock your score down a few points at the worst possible time.

How to Request a Credit Line Increase to Improve Your Credit Score?

The key areas where being in a position to request a higher credit limit can be beneficial include; If having a higher spending limit would help one to ensure that one keeps charging low, help to mix the credit types, or graduate from a store credit card, then it is advantageous to request for an increase once in a while. Here are a few tips to make sure the process helps rather than harms your scores.

• Requesting for higher limits on your first credit cards only because the accounts with the oldest credit history have the most significant impact. Newer cards can wait.
• Do not request an increase in credit within the next 6 months of the previous request.
• Maintain credit card utilization at less than 30% of the credit limit for each card before applying for more credit.
• If intending to apply for other credit shortly such as a mortgage or auto loan, be tactical to avoid new inquiries.

It is also important to monitor changes to credit. Since the request will not impact your scores in any way as long as you are approved, it assists you monitor your credit reports frequently to ensure you detect any issues with your accounts or otherwise as a result of identity theft.

The Bottom Line

As we have seen, applying for a credit line increase does not hurt your credit score. It is particularly advisable to let issuers re-evaluate your credit access periodically because as long as your income and credit standing enable you to qualify for a higher limit, you are likely to receive pre-approval credit increases. These automatic offers will not only help you to save time but definitely will not harm your score as well. And consciously asking for more credit yourself from time to time can let you use even less of your constantly increasing available credit.

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