How to increase your credit limit without hurting your score

Requesting a credit line increase can temporarily hurt your credit, but it can help in the long run. (iStock)

Requesting a credit limit increase could hurt your credit score, but only temporarily. More importantly, gaining a higher credit limit can increase your available credit and ultimately boost your credit score, depending on how you handle your credit card accounts.

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The key is to understand how your credit card activity influences your credit history. Here’s everything you need to know about getting a credit limit increase and how it might impact your credit.

How to get a higher limit on your credit card without hurting your score

There are a couple of ways of getting a higher credit limit that won’t impact your credit score. The first is if your credit card issuer raises your credit limit on its own. This can happen automatically if your credit has improved since you first got the card and you’ve used your card responsibly.

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The other way is if you request a credit limit increase, and your card issuer decides to approve the request without running a hard credit check. However, most of the time, there will be a hard credit check, which can impact your credit score.

The good news is that a single hard credit inquiry typically knocks fewer than five points off your credit score. What’s more, hard inquiries impact your credit score for only 12 months, so as long as you use your credit cards and other credit accounts responsibly, you likely won’t see a significant negative impact.

How much of a credit limit increase should I ask for?

There’s no rule of thumb for how much of a credit limit increase you should ask for, and credit card issuers will typically let you know how much you qualify for—of course, that’s if you’re approved for a credit limit increase in the first place.

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Credit card issuers use various factors to determine your eligibility, including your credit score, your income, and how much available credit you have now.

Call your card issuer to find out if you qualify and how much you can get, then decide whether you want to request the full amount you’re eligible for or less.

Credit card limit increases: Risks and rewards

A credit limit increase gives you more available credit on your account, and while that can be helpful for your credit score, it can also have the opposite effect if you’re not careful.

The primary benefit you can get is a lower credit utilization rate. Your credit utilization rate is how much of your available credit you’re using at any given time, and you can calculate it by dividing your credit card balances by your credit card limits.

For example, if you have a card with a $3,000 balance and an $8,000 limit, your utilization rate is 37.5 percent.

Credit experts recommend keeping your utilization rate below 30 percent, but there’s no hard-and-fast rule—the lower it is, the better. So if you were to get a credit limit increase to $10,000 on your card, that would lower your utilization rate to 30 percent, which could help improve your score.

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That said, if you’ve maxed out your current credit limit and are asking for more so you can use that too, it could have the opposite effect. Maxing out a credit card hurts your credit score not only because of the high utilization rate, but also because it makes it more difficult to keep up with your monthly payments. If you end up missing a payment by 30 days or more, it could drop your score significantly.

As a result, it’s important to consider your motivation behind asking for a credit limit increase. If you’re planning on using it to improve your credit utilization rate—or if you need it to make one large purchase but plan to pay it off quickly—it could potentially improve your credit, even with a hard inquiry. But if you’re hoping for a credit limit increase so you can max out your credit card further, you’re better off looking for ways to pay down your debt instead.