Do credit limit increases hurt your credit score?
August 24, 2023 6 min read
Credit limit increases happen for a number of reasons. You may outgrow your available credit and need to request more. If you’ve used your card responsibly over time, your credit card issuer might notify you that you’ve earned a credit limit increase.
But does a credit limit increase affect your credit scores? Whether you’re thinking about asking for an increase or you just got one, here’s some information to help you out.
- If you request a credit limit increase, your credit card issuer may perform a hard inquiry on your credit, which may temporarily lower your credit scores.
- If an issuer automatically raises a cardholder’s credit limit, it may involve a soft inquiry, which doesn’t affect credit scores.
- Capital One credit limit increases don’t hurt credit scores because they involve soft inquiries.
- A credit limit increase may help you improve your credit scores by lowering your credit utilization ratio.
Does requesting a credit limit increase hurt your credit score?
Generally, your lender will review your credit history when deciding whether to approve your credit limit increase request. As part of that process, the lender may get copies of your credit reports. This is known as a hard inquiry.
A hard inquiry may affect your credit scores since credit-scoring models consider how recently and how frequently you’ve applied for credit. But a single hard inquiry will generally only cause your credit scores to drop by a few points. And the inquiry will only show up on your credit report temporarily. If you have a Capital One credit card, requesting a credit limit increase won’t result in a hard inquiry.
Keep in mind that too many hard inquiries in a short period of time may have a larger negative impact on your scores. That’s why the Consumer Financial Protection Bureau (CFPB) recommends only applying for the credit you need.
If your credit card issuer automatically increases your credit limit, it may have still requested copies of your credit reports. But that’s typically considered a soft inquiry. And soft credit inquiries don’t impact your credit scores.
Before requesting a credit limit increase, consider asking your issuer about its procedure.
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—how much of your available credit you’re using—is an important factor in determining your credit scores. The CFPB recommends you keep your ratio under 30%. This, along with other responsible credit habits like making on-time payments, could help 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 specific 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.
- You want to be prepared in case of an emergency. 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. Maintaining a low credit utilization ratio—along with other responsible credit habits like making on-time payments—can help boost your credit scores. And having higher credit scores may be part of securing better terms, like a lower interest rate, on loans and lines of credit.
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.
- 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.
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 companies. 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, check out these frequently asked questions about credit limit increases.
Credit limit increases in a nutshell
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.
If you want to know how increasing your credit limit might affect your overall credit, you could use the CreditWise Simulator. It’s a feature within CreditWise from Capital One that also lets you access your TransUnion® credit report and VantageScore 3.0® credit score anytime for free. Using CreditWise won’t hurt your scores and it’s open to everyone—even if you don’t have a Capital One credit card.