Will Asking for Credit Increase or Hurt a FICO Score?

Credit card companies often increase your limit to induce spending, especially for good customers. You can also ask request a credit limit increase without risking much damage to your FICO credit score. Actually, asking for a credit limit usually increases improves your FICO score because that amount of credit you use is a significant chunk of the FICO score calculation.

Benefits

Your credit use counts towards 30 percent of your total FICO score, according to the Fair Isaac Corporation. Asking for and receiving an increase will boost your score. Say you use $1,000 on a $5,000 limit and then receive a $5,000 limit increase. You usage goes from 20 percent to 10 percent. At the worst, a company can just deny your request for a limit increase.

Considerations

Companies often automatically offer a credit limit increase without you asking. If you request one, they may pull a hard inquiry of your credit report after requesting information about your income and former employer. Hard inquiries, however, have a minimal effect on your credit score and for only six months, according to the Consumerist. You should accept an automatic increase because this does not involve a hard inquiry. If they raise your limit without question, this too does not involve an inquiry.

Warning

Your expanded line of credit could hurt your score if you use your new expanded credit line right away. Good borrowers do not rely on credit for day-to-day expenses. Forty percent of credit card holders have $1,000 or less in credit debt and the average person has $19,000 available to them on revolving loan credit cards, according to the Fair Isaac Corporation.

Tip

Each credit card company has a period where they do not allow a credit limit increase---usually six to 12 months after receiving an account, according to Bargaineering. After this period, consider going to your credit card's website, because most allow an online request. If you need a hard inquiry to gain more credit, avoid asking for an increase when you are applying for other kinds of credit. Multiple hard inquiries for different types of credit in a short period of time looks like you are hitting a rough patch in your finances.