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Does Requesting a Credit Limit Increase Affect Your Credit Score?

Does Requesting a Credit Limit Increase Affect Your Credit Score?

| June 01, 2023

Your credit utilization ratio (which refers to the percentage of available credit you’re using) is one of the most important factors when it comes to determining your credit score. In fact, credit utilization makes up 30% of your FICO® score!

One way to reduce your credit utilization is to pay down your debts, and another is to increase your credit limits on existing accounts. You probably already know that requesting a new line of credit will result in a hard inquiry (or “hard pull”) on your credit, temporarily lowering your score. But does requesting a credit limit increase have the same effect?

Credit Line Increases and Your Credit

Generally speaking, if the credit line issuer does a hard pull on your credit, your score is likely to be affected. Hard inquiries typically, though temporarily, drop your score by a few points. They come off your credit report after two years, but your score will often bounce back before then. If the card issuer only does a soft inquiry (or “soft pull”), your credit won’t be affected at all.

The difference lies in when the two occur: Hard pulls happen when a lender or credit card company checks your report before deciding whether to offer you a loan or a new line of credit, while soft pulls happen when a creditor checks your credit history when you haven’t previously applied for credit (or a new line of credit).

It’s important to note that if your card issuer does a hard pull, the timing of your request matters. One isolated hard inquiry likely won’t do much damage to your score, but if your credit report shows multiple hard inquiries close together, your score may drop significantly, as applying for a lot of new credit at once is often a sign of a high-risk consumer.

How Do You Know if a Creditor Does a Hard or Soft Pull?

Unfortunately, there’s no easy answer to such a question. Whether you’ll get a soft or hard pull typically depends on the credit card company and the amount you’re requesting. In many cases, relatively smaller credit line increases won’t require a hard pull. Some card issuers have set policies when it comes to whether they’ll make a hard inquiry or not, but with others, it’s less clear. 

Here are a few major issuers and the types of inquiries they do:

  • American Express: Soft pull
  • Bank of America: Either soft or hard pull
  • Chase: Either
  • Capital One: Soft pull (if you request once every six months or less)
  • Citi: Either (Citi will tell you before running the inquiry)
  • Discover: Soft pull (but if you want a much higher credit line increase, hard pull)
  • Wells Fargo: Mostly soft pulls, but it’s best to call and check
  • Synchrony: Soft pull (unless your account has been open for less than 60 days)

Keep in mind that some companies may update or change their policies, so to be safe, it’s a good idea to contact your credit card issuer and ask about soft vs. hard inquiries before you request a credit line increase.

Many will periodically review your account to see if you may be eligible for a credit line increase. Any time a credit line increase is initiated by the creditor, it’s a soft pull. If you keep your credit card balances low (under 30% is commonly suggested, but even lower is better) and make payments on time, you’re more likely to be offered periodic credit line increases.

Important Things to Remember

If you can request and receive a credit limit increase without it hurting your score, that is a great way to lower your credit utilization and help your score, but there’s a caveat to it: only do this if you have good spending habits! If you get a credit limit increase and rack up more credit card debt, you may actually increase your credit utilization and further hurt your credit score.

Ready to Achieve Your Credit Goals?

Whether you’re looking into a major purchase, like a car or a house, or just want to build credit for a solid financial future, improving your credit score is a noble goal. 

If you’re looking for help with creating a solid credit strategy or reaching any other financial goals, Good Life is here to help. Our experienced advisors will help you develop personalized solutions to help you get where you need to be.

If you think you might benefit from the services of a financial advisor, we invite you to contact us for a free consultation. This discovery meeting gives you the opportunity to get to know us and decide whether we’re the best team to help you reach your goals.