June 27, 2024 |5 min read
When it comes to credit limit increases, your credit scores could be affected in a few ways. But it depends how the increase happens and how an expanded limit is used.
Whether you’re thinking about asking for an increase or you just got one, here’s some information to help you learn more about how increasing your credit limit could affect your credit scores.
What you’ll learn:
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If you request a credit limit increase and your credit card issuer uses a hard inquiry to review your credit, it could temporarily lower your credit scores.
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If an issuer proactively raises a cardholder’s credit limit, it may involve a soft inquiry, which doesn’t affect credit scores.
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Capital One credit limit increases don’t hurt credit scores because they involve soft inquiries. That applies whether you requested the increase or you were offered it.
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A credit limit increase may help you improve your credit scores by lowering your credit utilization ratio.
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Does requesting a credit limit increase hurt your credit score?
Requesting a credit limit increase on its own shouldn’t affect your credit scores. But what happens after the request is received could.
When a person requests additional credit, their issuer might use a hard or soft credit inquiry to review the person’s credit history as part of the request. The type of inquiry will determine if it affects credit scores.
- If the review involves a soft inquiry, it won’t have an effect on your credit scores.
- If the review involves a hard inquiry, it could cause your credit scores to drop by a few points.
If your request is denied and it involves a hard inquiry, it may not be a good idea to ask again too soon. That’s because too many hard inquiries in a short period of time may have a larger negative impact on your scores. The Consumer Financial Protection Bureau (CFPB) recommends only applying for the credit you need.
Before requesting a credit limit increase, consider asking your issuer about its procedure.
What if my issuer proactively increased my credit limit?
If your credit card issuer increased your credit limit, it may have requested copies of your credit reports. But that’s typically considered a soft inquiry.
How does getting a credit limit increase affect your credit score?
As long as you don’t increase your spending by too much and keep making payments on time, your credit scores shouldn’t be negatively affected by a credit limit increase in the long run. That’s because a higher credit limit can help you lower your credit utilization ratio.
Credit utilization is a measure of how much of your available credit you’re using. It’s an important factor in determining your credit scores. The CFPB recommends you keep your ratio under 30%. This and other responsible credit habits, such as making on-time payments, could help you improve your credit score.
Should you request a credit limit increase?
There’s no one-size-fits-all answer for who should request a credit limit increase. It depends on your circ*mstances and financial goals. Here are a few examples of situations when you might consider a credit limit increase:
- You’re planning a big purchase. A higher credit limit may help you finance and pay off a large purchase over time. But keep in mind that if you carry a balance on your card, you may be charged interest. And carrying a balance may also impact your credit.
- You’re preparing for emergencies. Having more available credit may give you some peace of mind knowing you’ll be able to cover emergency costs. It’s also a good idea to work on building an emergency fund so you can avoid using credit or tapping into other savings to cover unexpected expenses.
- Your income increased. A higher income may help assure lenders that you can afford a higher credit limit. But remember, the CFPB recommends only applying for the credit you need.
- You want better loan terms. If you’re using credit responsibly and your scores increase, it might enhance your creditworthiness when you request an increase.
If you want to know how increasing your credit limit might affect your overall credit, you could use the CreditWise Simulator. It lets you test how different scenarios—including credit limit increases—might affect your credit. The Simulator is available through CreditWise from Capital One, which also lets you access your credit report and score anytime. CreditWise is free. Using it won’t hurt your scores. And it’s open to everyone—even if you don’t have a Capital One credit card.
How can you become eligible for a credit limit increase?
Here are some things that can help your chances of qualifying for a higher credit limit:
- Pay your monthly statements on time. Making on-time payments is an important way to build and improve your credit.
- Pay at least the minimum on your credit card bills every month. This is a big part of responsible credit use. And paying more than the minimum payment can help you save money on interest charges.
- Review your credit reports. It’s a good idea to make sure that there aren’t any errors on your credit reports. You can get free copies of your credit reports from each of the three major credit bureaus by visiting AnnualCreditReport.com. And you can use CreditWise to check your TransUnion credit report.
- Keep your financial and personal information up to date. Credit card companies will need your most current information to consider you for a credit limit increase.
How long does it take to get a credit limit increase?
Getting a credit limit increase depends on your situation and your issuer. If you’re eligible for a credit limit increase, your request may be approved almost immediately. But requests might take longer, especially if your issuer asks for more information to review a request.
What should you do if you get a credit limit increase you don’t want?
If you receive a credit limit increase you’d rather not have on your Capital One card, call 800-CAPITAL (800-227-4825). Capital One will reset your credit limit to its previous amount. Don’t want to be considered for a credit limit increase? Call the same number to opt out of consideration for the next five years.
How exactly you decline an increase varies among credit card issuers. You’ll want to contact your issuer to discuss your options and learn more about the possible impact to your credit scores.
Can your credit limit be reduced?
Your credit card company can also decrease your credit limit. Some of the reasons could include a number of missed or late payments or not using the card for a certain amount of time. If your credit limit is reduced, that means your credit utilization ratio could go up, which may cause your credit scores to dip.
If you want to learn more about Capital One policies, check out these frequently asked questions about credit limit increases.
How credit limit increases affect credit score FAQ
Still wondering about how getting a credit limit increase might affect your credit score? Here are some common questions about credit limit increases and credit scores:
Does requesting a credit limit increase hurt if it’s denied?
If a credit limit increase involves a hard inquiry, that could cause your scores to dip. But the denial itself shouldn’t be reflected in your credit reports. If you’re considering asking for an increase, you might want to call your credit card issuer to learn whether it uses hard inquiries as part of its credit reviews.
How much of a credit limit increase should you ask for?
If you request a credit limit increase, how much you ask for is up to you. But examining your credit and larger financial situation can help guide your request. For example, you could see where your credit utilization stands. Just make sure the amount you request won’t put you in a situation where you take on more debt than you can responsibly manage.
How often should you request a credit limit increase?
There’s no law about how often you can request a credit limit increase. But if your issuer uses a hard inquiry to review the request, it could affect your credit scores. And having too many hard inquiries in a short time could give potential lenders and card issuers the wrong impression.
Is it better to increase your credit limit or get a new card?
Whether it’s better to try to increase your credit or apply for a new credit card is a personal choice. But examining your financial situation might help you determine which—if any—is the right move. If a decision makes it harder to manage credit responsibly, it might be an indication to avoid it.
Wondering how increasing your credit limit and getting approved for a new credit card could affect your credit scores? Both might increase your total available credit. But whether they lower your credit utilization ratio depends on how you use your card—or cards—afterward.
Key takeaways: Credit limit increases
If you have a Capital One credit card, requesting a credit limit increase won’t hurt your credit. That’s because Capital One credit reviews involve soft inquiries. But that might not be the case for other issuers. If a credit limit increase involves a hard inquiry, that could cause credit scores to dip temporarily.
Thinking about opening a new credit card? You could compare Capital One cards. Then, you can see if you’re pre-approved by answering a few questions. Pre-approval doesn’t use a hard inquiry, so checking won’t impact your credit scores.
