Does increasing your credit limit affect credit scores?

Increasing your credit limit could affect your credit scores in a few ways. But it depends on how the increase happens and how an expanded credit limit is used.

Here’s some information to help you learn more about how increasing your credit limit could affect your credit scores.

What you’ll learn:

• 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.

• If an issuer proactively raises your credit limit, it may involve a soft inquiry, which doesn’t affect your credit scores.

• Capital One credit limit increases don’t hurt credit scores because they use soft inquiries. That applies whether you requested the increase or were offered it.

• A credit limit increase may help you improve your credit scores by lowering your credit utilization ratio—as long as you are continuing to use your card responsibly.

Whether asking for a credit limit increase hurts your credit scores depends on a couple of factors:

• The type of inquiry your issuer uses to review your credit history

• The impact on your credit utilization

Whether requesting a credit limit increase will affect your credit scores depends on whether your issuer uses a hard or soft credit inquiry to review your credit history as part of the request:

• 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 involved 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.

As long as you don’t increase your spending by too much and keep making payments on time—in addition to other responsible credit habits—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 scores.

There’s no one-size-fits-all answer for who should request a credit limit increase—and how much you ask for is up to you. It depends on your circumstances 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 scores. 

• 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.

Here are a few examples of situations when you might want to avoid asking for a credit limit increase:

• You recently opened the card: If you just opened the account, the issuer is unlikely to increase the credit limit.

• You recently received a credit limit increase: Your issuer might proactively increase your credit limit without you even needing to ask. And if you recently received an increase, the issuer is unlikely to increase it again.

• You recently applied for credit: While a single hard inquiry from one credit card issuer generally has a small impact on your credit scores, multiple hard inquiries in a short period of time can have a more significant impact. That’s because it could signal to lenders that your financial situation has worsened.

• You recently missed payments: If you’ve recently missed payments on a credit card or any other credit account, your issuer could see those missed payments on your credit report—and likely won’t allow you to borrow more money if it thinks you’re struggling to pay back what you already owe.

Here are some ways you can become eligible for a credit limit increase:

• 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.

• Don’t apply for credit too often. Submitting multiple credit applications over a short period of time could hurt your credit scores and signal to lenders that your financial situation has worsened.

• Review your credit reports. It’s a good idea to make sure 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. You can also use CreditWise from Capital One to access your credit report and credit score anytime. CreditWise is free and using it won’t hurt your credit scores. And you don’t even have to be a Capital One cardholder to use it. 

• 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.

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 decrease.

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.

Capital One cardholders can request a credit limit increase online. Be sure to have information like your annual income, employment status and monthly rent or mortgage payment handy.

Keep in mind that accounts that have been open only a few months are generally too new to be considered. And if an account has received an increase or decrease in the past few months, it typically won’t be considered either.

For more information, check out these guides on Capital One credit limit increases and Capital One’s credit policies.

If you received a credit limit increase you didn’t request and would rather not have on your Capital One card, call 800-CAPITAL (800-227-4825) to request a credit limit decrease. 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.

If you have a Capital One credit card, requesting a credit limit increase won’t hurt your credit scores. 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 your credit scores to dip temporarily.

Thinking about opening a new credit card? You could compare Capital One cards. Then you can see whether 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.