When You Ask for a Credit Increase on Your Credit Cards, Does It Affect Your Credit Score?

Whether you pay off your credit cards in full each month or carry a balance, you may want to up your credit limit. Asking the lender to increase your credit line should not affect your credit score. An extra credit check may lower it by a couple of points, but a lower debt-to-credit ratio should help.

Calculating Credit Scores

Every time you borrow money, the lender reports it to one or more credit bureaus. If you miss a payment or are late by a few days, the lender will report this, too. If you default on a debt, the lender will certainly report it. The credit bureaus then take all of the information, plug it into a formula and come up with a three-digit number. This number is your credit score. While the actual formula is secret, some things are clear. The two most important factors are your repayment history and how much you owe. Less important, but still weighted, is the length of your credit history, the type of credit you have and the number of recent credit inquiries by lenders.

Credit Limit Increase and Credit Scores

When you ask for a higher credit limit, the credit card issuer will run a credit check to determine whether or not you are a good lending risk. Every time someone runs a credit check on you, it will appear on your credit report. It doesn't matter whether or not the application was successful. It doesn't mention on the report if the lender turned you down. Just the fact that you were applying for more credit tells lenders that you need money. A single credit check may cost you a few points off your credit score, but it's nothing to worry about. Multiple credit checks will make you look desperate. This will hurt your score a lot more. If you do get the credit increase, it will have a positive influence on your debt-to-credit ratio. Lenders don't like it when people max out their credit lines. A higher credit limit will raise your credit score, unless you increase your debt by a similar proportion.

Raising Your Credit Score

The best way to improve your credit history is to keep up with your payments and lower your total debt. It doesn't matter if you can only pay the minimum each month. Pay that. Missed payments will destroy your credit score. If you can pay more than the minimum and thus pay down your debt more quickly, that, too, will help your score. The less you owe, the better.

Credit Scores Matter

Credit scores matter even if you are not trying to buy a house or take out a loan. Landlords run credit checks on potential tenants. Cell phone companies run credit checks on customers when they apply for a contract. Some employers run credit checks before hiring new employees. Even life insurance companies run credit checks. A low credit score will keep you from more than just getting a mortgage.