Does a Credit Line Increase the Soft or Hard Inquiry?

You should ask your credit card company for a limit increase every so often, because the percent of your credit limit used, called credit utilization ratio, can impact your credit score. However, requesting a limit increase can put you over the edge when a lender determines whether or not you are an acceptable risk.

Identification

Some credit card companies increase the credit limit on an account at set intervals, such as every six months, while others perform a hard credit inquiry before granting a limit increase. If the company offers a limit increase, the inquiry is soft, so it does not affect your credit rating. If you ask the company for a limit increase and it requests consent to perform a credit check, the inquiry probably counts as a hard inquiry.

Effect of Inquiries

A soft inquiry only shows on a credit report when you run a check on yourself, so it does not affect your credit score and lenders cannot make informal judgments about a soft inquiry. A hard inquiry can take up to five points off your FICO score, but additional inquiries do exponential amounts of damage. Once you have six or more inquiries, you become a high-risk borrower to lenders because consumers with excessive inquiries tend to be hunting for credit in anticipation of financial ruin, according to the Fair Isaac Corporation.

Asking About Inquiries

Your lender probably will tell you whether it will perform a hard inquiry if you ask before it goes through the account review process. If the lender requires you to answer questions about how much credit you need, employment history, current income and debts, you can expect the company to perform a hard check. You may want to cease communication so the lender does not interpret the rest of the call as a consent to a hard credit check.

Tip

If you want to lower your credit utilization ratio and avoid a hard inquiry, find someone willing to let you co-sign on an existing account or become an authorized user. The benefit of this comes with a huge risk: You put your credit rating in the hands of another person. If the primary borrower defaults on the account, you credit rating drops too, and if you co-sign the account, you are legally liable for the debt.