Does Asking for a Credit Card Increase Affect My Credit Score?

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While it can be confusing to keep track of all of the things that affect your credit score, it's important to have a good grasp on what can cause your score to drop or improve. Asking for a credit card increase is one thing that has an effect on your credit score and can impact it both negatively and positively. 

Credit Increase Basics

A credit increase is simply an increase in the amount of available credit you have on your card. Many credit card companies, will automatically increase your credit limit after your account has been in good standing for a certain amount of time, especially when you are using credit cards for good credit. Other credit card issuers will not increase your credit limit unless you request it. 

How Asking for an Increase Affects Your Credit
There are a few different ways asking for a credit increase affects your credit score. Let’s start with the good:

It lowers your credit utilization.

Your credit utilization, or the amount of money you owe on your accounts overall, makes up a third of your credit score. If you have a number of lines of credit and they’re all maxed out, your score will be lower.

Experts recommend that you keep your credit utilization at about 30%. For example, let’s say you have a $1,000 credit limit, but your balance is typically around $750. This puts your credit utilization at 75%, much higher than the recommended 30%. If you increase your limit to $2,000, however, suddenly you are only using 37% of your available credit, which is much closer to the recommended amount. As a result, your credit score would improve. 

It could mean better rates on loans and cards

When you’re not using all of your available credit, you’ll have more options available to you. This allows you to qualify for the best credit card rates or lower interest rates on loans.

Here are some of the not-so-great effects of asking for a credit increase:

It puts an inquiry on your credit report. 

Many credit card companies will run your credit before they grant an increase in your credit limit. This puts an inquiry on your credit report. Multiple inquiries in a short amount of time can lower your score.

It can be tempting to overspend.

Unless you’re very disciplined, more available credit could open up the doors of temptation and lead to overspending. This can leave you worse off than before—not only do you no longer have a cushion of available credit, but it leaves you deeper in debt.

What to do if you’re turned down

If your request for an increase is denied, you may be tempted to apply for credit cards for bad credit to increase your debt to income ratio or available credit. However, you’re better off simply paying down your balance on your existing credit.

If you’re considering asking for a credit card limit increase, you need to ask yourself two things: “Why do I want the increase?” and “Am I disciplined enough not to overspend?” Asking for an increase in your credit can work to your advantage if you do it for the right reasons and can keep your overall credit utilization down.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXpo.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.