Higher Credit Limits Help Improve Credit Scores

Credit card holders should ask lenders to increase their limit

Higher Credit Limits Help Improve Credit Scores
May 4, 2016

Few credit card users ask credit card companies to raise their credit limit, but research shows that doing so can help improve their credit scores. This is because the higher limit improves their credit utilization rate, which is the percentage of credit the consumer is using out of the total credit amount available to him or her. With a higher limit, that percentage decreases, making the borrower look more appealing to lenders.

Those who have had difficulty qualifying for low interest rates on auto loans or mortgages may find adjusting their credit utilization rate can help them get the rates they want because it accounts for almost a third of their credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

However, consumers who tend to always carry large balances on their credit cards, especially those who are almost always at their current credit limit, may need to think twice before having the limit raised. If they are not able to control their spending, they may quickly reach near 100 percent credit utilization again, leaving them in more debt but without any additional benefit.

While some credit card users are uncertain if they qualify for a limit increase, lenders are actually fairly open to raising credit limits. Almost 80 percent of all consumers who ask the card issuer to increase their limit are approved. However, that statistic applies only to those over the age of thirty. Only about half of the borrowers under age thirty are approved for a limit increase.

If you want more credit, check out MoneyTips' list of credit card offers.

  Conversation   |   9 Comments

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Carla | 05.04.16 @ 14:55
I would have thought a higher limit would be harder on your credit score. This is good to know in case I need a higher limit in the future.
Elaine | 05.04.16 @ 14:55
I found that odd. I guess the lenders feel the higher the limit the better chance you will actually spend it all up. I guess that is just another reason I have no cred bc I have no card.
Sara | 05.04.16 @ 14:55
Not sure I want a higher credit limit. Though helping our credit score is nice at the same time we had a card that auto bumped the limit up and yeah things did not do so well with that one.
Steffanie | 05.04.16 @ 14:56
I never knew having a higher limit helped my credit score. I would really just prefer not to have a cc, but I do keep one around for emergencies.
Kamie | 05.04.16 @ 14:56
it seems like a great idea, definitely would not want to be a person who does not have control over spending money to get an increase, but if a person can be smart about it, and use it as a tool to just make their credit get better then I think this is a great thing to ask the credit card company for,
Erin | 05.04.16 @ 14:56
We've never had to ask for a limit increase. It's automatically been done for us. However, that hasn't occurred for a while. We never come close to reaching our limit, so it was never something I thought about asking about. It might be time to check into doing this.
STOKES | 05.04.16 @ 14:57
I like to keep my credit limits low to prevent temptation. But I also try to keep utilization under 30% as well.
irene | 05.04.16 @ 14:57
Interesting. My credit card sens me letters all the time about applying for an increase but I have always just ignored them. maybe I should do it
Alec | 05.04.16 @ 14:57
My husband and I are in our mid 20s. Our credit card company raised our credit limit twice last year without asking us. I don't know if that is good or bad honestly but after having read this, I'm inclined to believe it was due to us keeping the balance low. We are trying to build the best credit we can and don't live beyond our means. The credit card is mostly for small fun outings or emergencies.
$commenter.renderDisplayableName() | 01.25.21 @ 19:50