Does Asking For A Credit Increase Affect Credit Score?

Is There Any Impact in Requesting for Credit Limit Increase on the Credit Score?

In terms of credit management, one of the questions that people have is whether applying for a higher credit limit affects credit score. Since credit is involved in financial life ranging from loans to credit cards, it is normal to develop a concern over anything that could pull down your score.

Fortunately, just asking for an increase in credit card limit, which is referred to as a credit line increase, does not reduce your credit score. So, provided that you are using the high limit wisely and paying on time each month, a credit limit increase should not inversely affect your credit score.

Why Requesting A Higher Limit Doesn’t Hurt Your Credit Score

When you apply for a higher credit on your current credit, the credit card company will perform a soft credit check instead of a hard check. They are also known as a soft pull or a prescreen, soft checks enable the lenders to access your credit report without any negative impact.

Hard inquiries occur when you apply for a new credit, whether it is a credit card, an auto loan, or a mortgage. Multiple hard inquiries within a short period indicate that the borrower is engaging in risky behaviors and thus it may reduce the credit score.

While a hard credit check will appear on your credit report together with that of the lender who conducted it, soft pulls are not visible to other parties. This enables card issuers to pre-qualify you for higher credit limits or pre-qualified offers without affecting your score in any way. There is no harm in requesting higher credit limits so long as you have been a responsible user of the credit granted to you.

Why a Higher Credit Limit Can Be Advantageous for Your Credit Rating

As for credit availability, it will not hurt to ask for higher credit limits; however, maintaining higher credit limits, and managing large credit lines responsibly, will benefit your credit in the long run. This is because when you have more available credit, it is advisable to lower your credit utilization ratio.

Your credit utilization ratio is the comparison of the current credit card balances to the total credit limit. It is suggested that this ratio should be below 30% and lower is even better if you want to achieve a higher credit score.

For instance, suppose one has a credit card with a limit of $1000 and a balance of $500; it means that the credit utilization ratio is 50%. That $500 balance is suddenly 25% of the requested $2,000 rather than the current $500 funding. This can increase your credit score as it demonstrates better credit management.

Here are some tips that would help when requesting for a higher credit limit.

If you could benefit from lowering your utilization or having access to more credit in case of emergencies, here are some pointers to help with requesting an increase.

Request a limit higher than what you currently use at least twice the amount of the increase you want.
It is best to request after about six months from the last time your salary was raised.
Before applying for a credit card, make sure to review your credit report and correct any mistakes that you find.
Reduce balances that are much lower than credit limits before applying for new credit
You may be asked about your income and payment history as a candidate for the position.

So long as the credit records show that one has always made the payments on time and has a low credit utilization ratio, there should not be a problem with requesting for a higher credit limit. It is advisable to spend some time reviewing your credit reports from all three credit bureaus to confirm that everything is correct.

It can also be useful to try to pay off your credit card balances more aggressively than usual for several months before the filing. This informs the issuer the applicant is willing to have more available credit and is in a better position to repay.

Some Considerations Towards Higher Credit Limits

While getting approved for higher credit limits can be beneficial, it does come with some cautions to keep in mind as well.

Do not take new limits as the license to overspend just because there is some freedom of movement. It is important not to exceed the amount that you have planned for regardless of the total credit limit available.
You should know that new inquiries may appear for up to two years, so it is not advisable to apply for several increases at once. Space out increase requests.
Yes, issuers may freeze or even reduce your credit limit or completely close the account if you incur more debt or default on payments after getting a new credit facility.

As long as you establish a clean record on any newly opened credit, and as long as you consistently prove creditworthiness month after month, high limits are beneficial. However, if you use more of your newly available credit, there are also higher odds of going overboard and incurring payment blunders.

Evaluate whether approval for a higher credit is sustainable with your spending habits and credit repayment before requesting for higher credit limit. Instead of using any additional borrowing room that might be available randomly, consider it and apply it wisely rather than using it blindly.

The Bottom Line

Lastly, it is important to note that applying for higher credit limits should not be detrimental to your credit score. As far as only the Inquiry is concerned, as long as the card issuer has done a soft pull and has agreed to your request, the Inquiry will not reduce your score or be reflected in the credit reports.

However, do remember that although more available room helps by reducing utilization, having larger limits also means you have a larger debt ceiling to worry about. Propose reasonable additions that they cannot negotiate against your financial capabilities and liabilities. As long as you do not alter your spending and payment behavior after being approved, requesting a higher credit should not harm or even help your credit score in the long run.

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