What Happens to Your Credit Score if You Get a Credit Limit Increase?

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The quick answer? It depends what you do with that increase.

Key points

  • A higher limit across your credit cards could help your credit score improve.
  • But if you use that higher limit, the opposite might happen.

Your credit score isn't just a random number. Rather, it's calculated based on different factors, each of which carries a different amount of weight.

Your payment history, for example, carries the most weight when determining that number, and it speaks to how timely you are with your bills. Your credit utilization ratio is another important factor that goes into your credit score, and it measures how much of your available revolving credit you're using at once.

Generally speaking, once your credit utilization ratio exceeds 30%, credit score damage can ensue. On the flipside, a low utilization ratio can help your credit score improve.

It's for this reason that getting a credit limit increase could actually end up raising your credit score. But that'll only happen under the right circumstances.

A credit limit increase could be a positive thing

There are different scenarios in which you might qualify for a spending limit increase across your credit cards. If you can prove that your income has gone up, your credit card issuers may be willing to grant you more leeway on the spending front. Furthermore, if you've been an account holder in good standing for many years, you may be granted a credit limit increase if you request one.

A higher limit across your credit cards could help your credit score improve. Say you owe $4,000 on your credit cards and have a total spending limit of $10,000 to work with. That's a utilization ratio of 40%, which could be hurting your score. If you were to get a credit limit increase of $4,000 across your various cards, bringing your total revolving credit limit to $14,000, that would drop your utilization ratio to a little under 29%. And that could, in turn, help your credit score climb.

That said, a higher credit limit will only help your credit score if you don't actually use it. The way to keep your credit utilization ratio low is to charge a lot less than you're able to on your credit cards. If you get a credit limit increase of $4,000 but spend an extra $4,000 once it's in place, it won't do your credit score any good.

Plus, a higher credit limit could open the door to more temptation on the spending front. If you've struggled to keep your spending in check in the past, you may not want to put yourself in that position.

Another way to lower your credit utilization

If you want to see your credit score improve and you're already doing a good job of paying your bills on time, then it pays to focus on your credit utilization ratio. But that doesn't necessarily mean getting a credit limit increase. You can also bring that ratio down by paying off a chunk of your existing credit card debt.

Doing so won't just help your credit score -- it could also save you a lot of money by sparing you from more accrued interest. While there's nothing wrong with attempting to raise your credit score by increasing your credit limit, it's also important to whittle down the existing balances you have as quickly as you can.

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