Does Requesting A Credit Increase Hurt Your Credit? (2024)

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Published: Jul 28, 2023, 9:00am

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When you ask your credit card company to raise your credit limit, it may review your credit report to determine whether you’re eligible for the additional borrowing capacity you’re seeking. If that credit review results in a hard inquiry (which is often the case), it might have a negative affect on your credit score.

On a positive note, applications for new credit only influence 10% of your FICO® Score, so the damage to your score is minimal. According to FICO, one additional hard inquiry on a credit report will take less than five points off most people’s FICO Scores. Furthermore, any impact an inquiry does have on your credit score will be short lived. Although credit inquiries remain on your credit report for up to two years, they only factor into your FICO Score for 12 months.

It’s also possible that asking for a credit increase could help your credit score rather than hurt it. If a card issuer approves you for a higher credit limit, the result might be a decrease in your credit utilization rate.

Credit utilization measures the relationship between your credit card limits and balances or the percentage of your credit card limits that are in use. If your credit report shows you have an outstanding balance on your credit card account, getting a higher credit limit could work in your favor.

For example, if you owe $500 on a credit card with a $1,000 limit, your credit utilization rate on the account is 50%. However, if your card issuer increases your credit limit to $2,000 and your balance remains at $500, your credit utilization ratio drops to 25%. From a credit score perspective, the lower your credit utilization ratio, the better.

Of course, the best way to keep your credit utilization ratio low is to pay off your credit card balance every month (preferably before the statement closing date on your account). This smart credit card strategy can be a great potential way to increase your credit score. But as you can see in the example above, you can also reduce your credit utilization rate by asking for a higher credit limit.

Credit utilization is an important credit score factor that influences 30% of your FICO Score. So, if your request for a credit limit increase is approved, it could have a meaningful, positive impact on your overall credit score.

Before you apply for new credit, including a credit limit increase, it’s important to consider the benefits and drawbacks of your request. Here are some of the pros and cons of asking your credit card issuer for a credit limit increase.

Pros

• Potential credit score improvement: If your credit card issuer approves your request for a higher credit limit, it could decrease your credit utilization ratio and improve your credit score as a result. A higher credit limit may also make it easier to maintain a low credit utilization rate and protect your credit score for the future.
• Higher borrowing capability: When you have a higher credit limit, it’s possible to use your credit card for larger purchases or to charge higher amounts on your account each month. As long as you follow the good habit of paying off your full balance each billing cycle, you may want to use your credit card for most purchases. In fact, doing so could offer you additional security, rewards, and credit-building benefits.

Cons

• Possible denial: There’s no guarantee your credit card company will approve your request for a credit limit increase. If a card issuer denies your request, you could have a hard inquiry on your credit report without the upside of possible credit score improvement.
• Potential for debt: A credit limit increase may lead to the temptation to overspend. If you have a track record of not paying off your credit card balances each month, it might be unwise to ask for a higher credit limit that has the potential to lead to bigger credit card debt issues down the road.

Applying for a higher credit limit is likely to have some impact on your credit score. And while there’s not much you can do to avoid this reality if you want to request a credit limit increase, you can try to set yourself up for a potential credit score increase rather than a reduction.

If a card issuer performs a hard inquiry on your credit report when you request a higher credit limit, you may experience a slight drop in your credit score. But if you qualify for a higher credit limit and your credit utilization ratio decreases as a result, the overall impact on your credit score might still be positive.

You might have a better chance of qualifying for a higher credit limit under the following circ*mstances.

• Your credit score has increased.
• Your income has increased.
• You’ve reduced debt by paying off loans or lowering credit card balances.
• You’ve established a track record of on-time history with your credit card company.

Keep in mind that your credit card issuer will likely review your credit report when you apply for a credit limit increase. So, it’s wise to check your credit reports yourself and check for any issues before making your request. If you discover any credit report errors, federal law gives you the right to dispute those mistakes with the appropriate credit reporting agencies.

It’s also wise to limit how often you ask for a credit limit increase. If you go overboard with requests, you may expose your credit score to potential damage from excessive hard credit inquiries.

Asking for a higher credit limit on your credit card account could be a smart potential way to improve your credit score. But a credit increase doesn’t guarantee that your credit score will go up. And there’s no way to know in advance whether a credit card issuer will approve or deny your request.

Making multiple payments each month and paying your credit card early are two other smart strategies that might help you maintain a lower credit utilization rate (and possibly a higher credit score by extension). But the most important practices you can follow where credit cards are concerned is to always pay your credit card bill on time and in full every month.