Does Requesting a Credit Increase Hurt Your Score?

Does Requesting a Credit Increase Hurt Your Score?

When it comes to your credit health, a credit increase may do a lot. It may help lessen your credit utilization rate, provide you more rooms to grow your finances, and be a great vote of confidence from the lenders that you’re a responsible borrower.

In terms of requesting a credit increase, how will it hurt your score? Well, it actually depends, but it’s always best to ask.

What You Should Know about Credit Limit?

Your credit limit is basically the maximum amount you can spend on your credit card. This is established based on some factors, which may include your credit history, the company you’re applying to, as well as your debt-to-income ratio.

Every bank or credit card company has its own set of guidelines in terms of establishing credit limits. They’ll assess your application depending on such parameters and provide you credit limits that you can pay back. Besides, the last thing they like is not to pay your bills.

Credit limit doesn’t impact your score, but how you’ll use your limit does. Credit limits show your credit utilization and if this number is too high, lenders will consider you as a risk.

To stick with the recommendation of using 30% of your available credit, you must spend less than $3,000 every month and pay it back each time. Once you do this to show lenders that you’re responsible, you can quickly end up with a credit increase. However, if you spend $8,000 and pay the minimum payment, creditors will see you as risky and you won’t be as keen to send more cash your way.

While your credit limit is the amount you can spend on your card, it’s another tool for the lenders to see how much you have on your finances. Not maxing out your card or using it wisely would help you make significant financial moves.

Ways To Increase Your Credit Limit?

If you’re one of the many responsible borrowers, it means that you don’t usually spend beyond what you can afford and you always pay bills on time, which is likely that your lenders would provide you a boost periodically without the need to ask.

Usually, if you have a total of 6 months or a year of paying on time, you work with a good utilization ratio. If you haven’t maxed out your card, your lenders might be inclined to raise your limit automatically.

Moreover, if your account details are updated, like your income level, your lenders will see any increases in your income and would bump up your limits accordingly.

When is the Best Time to Ask for a Credit Limit Increase?

If you got a credit card and you itch for an increase, try chilling out for quite some time. The reason behind it is that it may take time to prove to your lenders that you’re a responsible borrower, so make sure that your actions will do the talking. If it has been a year since you consider a credit increase, there’s nothing wrong with asking.

Do you have the same question in your mind “Does Income Affect Credit Score?”. Read the article to understand all about it.