Credit Line Increases Can Hurt Your Credit Score

While it makes sense to raise credit lines periodically to increase your total credit line and available credit percentage, it can also backfire from time to time.

Many credit line requests count as credit inquiries, which will likely be documented on your credit report for about two years.

If you make a credit line increase request, you could be flat out denied or the credit card issuer may ask for income documentation to verify that you actually make what you say you make every year.

If you are denied, or even granted a credit line increase, you’ll also need to wait for a certain period of time before you make another credit line increase request on that credit card account.

So if you asked for a $10,000 increase and the issuer says no, you may have lost your chance for a month or two to make a more reasonable line increase. That’s why it makes sense to ask for a more subtle increase, such as another 10-20% of your current credit line.

A credit line increase request will also come with a temporary credit score ding as the new inquiry weighs in, and other creditors may shy away from offering you new or extended credit because of your recent line increase or request.

Think of it this way. If you recently made a credit line increase request, and then a month later decided that you wanted to apply for a new credit card because of its 0% APR for 15 months, the card issuer may decline your application because of that recent line increase.

The way the card issuer sees it, you just applied for new credit a month ago, and for that reason you’re deemed a high-risk applicant.

To avoid unnecessary drops in your credit score and possible denied credit card applications, let the card issuers raise your credit line for you.

If you pay on time and use your credit line each month, the card issuers will likely bump your credit line up as a sign of trust. And they won’t pull your credit so you won’t have to worry about any new inquiries or credit dings either.

Remember, it’s not always necessary to bump up your credit line, especially if you’ve already got a decent available credit percentage. Never raise your credit lines arbitrarily, as the negatives will likely outweigh any benefits.

Related Topics:

1. Periodically Raise Credit Card Limits
2. How to Raise Your Credit Score
3. Avoid Credit Inquiries When Requesting Higher Lines of Credit
4. Card Issuers May Cut Your Credit Line as You Pay Off Your Balance
5. How a Cut Credit Line Can Lead to an Over-the-Limit Fee