Does requesting a credit limit increase affect your credit score? (2024)

While a credit limit increase might make it easier for you to pay for your next big purchase or lower yourcredit utilization rate, consumers should know that it can actually impact your credit score.

CNBC Select spoke with Ted Rossman, credit card senior industry analyst at Bankrate, and Matt Schulz, chief credit analyst at LendingTree, to find out more about how your credit score could be affected by requesting a higher credit limit.

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Depending on the card issuer, making a request for a higher credit limit can incur either a hard inquiry, a soft inquiry or both types of credit checks into your credit report, explains Rossman.

A hard inquiry occurs when a lender pulls your credit report —this action typically causes your credit score to decrease between five and 10 points. Note that while a hard inquiry will only affect your credit score for up to one year, it will stay on your credit report for two years.

In contrast, a soft credit check doesn't have any effect on your credit score. For example, Capital One would not perform a hard inquiry if a cardholder were to request an increased credit limit for one of their Capital One credit cards, including cards like Capital One Venture X Rewards Credit Card (see rates and fees), which CNBC Select named as editor's choice for the best credit card.

Keep in mind that most card issuers don't publicly reveal which type of credit check they'll perform on consumers requesting a higher credit limit, so you'll want to call ahead and ask to be sure.

You can quickly request a credit limit increase for Citi credit cards, like the Citi Double Cash® Card, through the bank's app with just a few taps. And reports indicate that Citibank will almost always only use a soft pull when making this request, but if you want a higher credit limit than what Citi initially offers you, they'll then perform a hard pull. Citi also offers automatic credit limit increases which don't result in a hard pull.

Schulz notes that you shouldn't be too concerned if your card issuer performs a hard inquiry into your credit report as the slight ding to your credit score is only temporary. The benefits of asking and receiving a higher credit limit often outweigh the negative effects of the inquiry into your credit report, says Schulz.

When you increase your credit limit, you may also be improving your credit utilization ratio, which can help your credit score in the long run. There are five factors that make up your FICO credit score: your payment history (35%), the amount owed (30%), the length of your credit history (15%), your credit mix (10%) and new credit (10%).

The amount owed category (30%) considers five factors as well, including how much money you owe across all your accounts, the amount you owe based on the different types of accounts you have, the value of your current balances, how much you owe on your installment loans and your credit utilization ratio.

Therefore, experts say the credit utilization ratio comprises 30% of your FICO score since it only applies to revolving lines of credit and is defined as the ratio of credit you're using to the total amount of credit you've been extended.

For example, if you owe $2,000 on a credit card with a $10,000 limit, that means you have a utilization ratio of 20% on that card. The total credit utilization ratio would be based on the total amount of revolving credit you've been extended and the total amount you've used.

While experts generally recommend that people keep their credit utilization ratio under 30%, anything below 10% is even better.

Credit utilization is the second most important factor in the FICO scoring formula after your payment history, so improving your credit utilization ratio can end up having a positive impact on your credit history, explains Schulz.

Getting into the habit of checking your credit report can also make it easier to spot incidents of fraud. Credit monitoring services such as CreditWise®, Experian free credit monitoring and IdentityForce® UltraSecure can also be used to detect errors on your credit report —if someone was applying for a line of credit under your name, for instance.

Regardless of whether your credit card issuer performs a hard or soft credit check (or both), when you ask for a higher credit limit, the impact those inquiries have on your credit score is typically negligible in the long run. Cardholders should instead focus more on why they're asking for a higher credit limit — you don't want to use the credit increase to bankroll a lifestyle you can't afford, but remember, getting your credit limit raised may help you finance important expenses and can boost your credit score by lowering your credit utilization ratio.

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