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How Does Requesting an increased Credit Limit Affect Your Credit Score?

Credit limit increases can be confusing enough. If you have used your credit cards wisely, you may earn an additional credit card limit, or you might have exhausted your current credit limit and want to request more.

But the question is–does an increased credit limit affect your credit score?

How can you qualify for an increased credit limit?

Let’s analyze how your credit score suffers a change when you apply for increased credit.

Does requesting a credit increase affect your credit score? 

As long as you keep your spending minimal and keep making timely payments, your credit limit won’t negatively affect your credit score. It may only help improve your credit score in the long run.

However, your Credit Utilization Ratio may affect the credit score a bit. Credit Utilization Ratio is the amount you owe compared to your credit limit. And it is recommended to keep your credit utilization ratio below 30%.

Increasing your credit limit lowers your credit utilization ratio. Having an increased credit limit is only possible if your spending habits are good and you pay off bad credit student loans on guaranteed approval on time. Alternatively, if you increase your spending and lose track of payments, this credit increase won’t be as helpful.

You might see your credit score drop after requesting a credit limit increase. A credit increase request is followed by a critical assessment of the credit situation by the creditors. However, inquiries may not directly affect the credit score, but too many inquiries can harm it.

How Can a Credit Limit Request Be started? 

There are two ways to request a credit limit increase- Automatic way or by requesting the creditor.

An automatic credit limit increase request works if you meet certain guidelines laid out by the lender. And under these circumstances, a soft credit check is conducted. And this soft check does not affect the credit score.

Contrary to this, if you request the creditor for increasing the credit card limit, lenders will review your credit history and consider the additional amount of credit you have asked for. As part of this process, the lender may ask you for a copy of your credit report. It is termed as “hard inquiry”. As mentioned above, a hard inquiry may affect your credit score. For this reason, it is best to ask your creditor about the credit request process. 

When Should One Request a Credit limit Increase? 

Here are some situations under which you could raise a credit increase request from your creditor:

  • If you have just got a raise on your salary, you can request a credit limit increase
  • If you make payments timely and require an additional credit limit
  • You have a high Credit Utilization Ratio
  • You have a good credit score to secure an additional credit limit

When Should One Not Request a Credit Card Limit Increase? 

As opposed to the reasons when you can request an increased credit limit, here is when you should completely avoid doing so: 

  • When you have requested a credit limit increase recently
  • When you have applied for new lines of credit,
  • When you have a low-paying job,
  • When your credit score isn’t good enough,
  • When you are moving overseas for a venture

How Can You Qualify for A Securing a Higher Credit Limit? 

Regardless of the situation, all an individual look forward to is getting approved of the increased credit limit application. Considering these eligibility parameters may help you prepare before you request an increase in your credit limit from your creditor.

  1. Credit card companies conduct a detailed analysis of your credit report before granting you an additional credit limit, thus eliminating every delinquency and keeping your financial and personal information up-to-date in the credit card report.
  2. Pay your monthly payments on time. It will help you build your credit and improve your credit history.
  3. Pay more than the minimum payments to increase your credibility
  4. Monitor your credit report frequently and alert your creditors to make the required changes to the credit report (if any)
  5. Don’t raise a credit limit increase request before 6 months of requesting it.

What Should You Be Mindful of After Getting the Additional Credit? 

When you are approved of the credit limit increase request, you will have access to a whopping credit limit. At this moment, it is natural to go off track for utilizing credit. But highlight the primary reason you took additional credit for.

Some cardholders are tempted to fall for impulse expenditures. If that sounds like you, never request more credit than you need.

 However, it may help increase your Credit Utilization Rate (CUR), but it might not be an ideal thing to do so. Thus, maintaining responsible credit usage, paying bills timely, and avoiding falling for impulses is the best way to keep your credit on good terms and avoid falling into a debt trap.

Are There Any Alternatives to Requesting Additional Credit Limit? 

Yes, there are.

However, you can seek a credit limit increase for meeting your urgent requirements. Shifting your line of credit from one card to another can also assist your move. It is an easy way to increase the spending ability of the card without affecting the credit score or taking additional risks. This is ideal if you want to make a big purchase. Applying for another credit card is also one alternative to the increasing credit limit.

Bottom Line

Credit limit increases are easy to apply for, but multiple factors play a role in approval. Being a responsible cardholder, ask for the increase at the right time. It will help you get quick approval.

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