Will it Hurt My Credit Score If I Ask to Lower My Credit Limit on My Credit Card?

Asking the credit card company to lower your limit could be an effective way to control spending, but this might damage your credit score and make you appear to be a worse borrower. The percent of your credit limit which you use is an important ratio in the FICO score calculation, and one you have much control over. Instead, request a higher limit.

Identification

Losing available credit hurts your credit utilization score -- the percent of your total credit limit available on all cards, and that on each account, according to Bloomberg. If you had $2,000 on a $10,000 limit across all cards and cancel an account with a $2,000 limit, for example, your utilization jumps from 20 percent to 25 percent. Good borrowers do no use more than 25 to 35 percent of their credit limit.

Effect

A rising credit utilization rate could lower your score by up to 45 points, and take you from the category of excellent borrower to above-average or average. This could mean paying a higher interest on future credit cards you apply for, or any other loan. Most credit card companies lower limits when they consider you a high risk, so there is little need to do it on your own.

Ask for a Higher Limit

If you care about maximizing your credit score, you should ask for a higher limit on your card. The bank will probably grant your request, unless you have a poor payment history or a maxed-out line. This is also a great way to potentially boost your score without applying for a loan or taking on any more physical debt, as long as the lender does not perform a hard credit check. Hard credit checks will hurt your score a few points, and much more when you have six or more within a year. The only way to know for sure if the creditor does a hard check is to ask the customer service representative.

Tip

Despite popular misconception, the FICO model does not ding you for having too much available credit. Any score that does is not a true FICO score, and of little importance in the consumer credit industry. In addition to asking for a higher limit, try to cut credit card debt as much as possible. Thirty percent credit utilization is a good goal, but aim for 0 percent.