Pros and Cons of Requesting a Credit Line Increase

by Nov 2, 2021Credit Consulting

Asking a credit card issuer for a credit line increase can offer some financial benefits, but it can take a wrong turn if you’re not ready for the responsibility. Let’s review the pros and cons of requesting credit line increases, and if they are the right choice for you.

Is it good if my credit line increases?

The biggest benefit in increasing your credit line is how it can potentially impact your credit score. Credit scores are determined by numerous factors, and one of them is the debt-to-income ratio. It’s generally recommended that credit card holders use only 50% or less of their total credit to keep a reasonable credit score. For example, if you had a $5,000 credit limit, you should have $2,500 or less in debt.

With a credit line increase, you may be able to decrease your debt-to-income ratio and then see a boost in your credit score. However, this scenario assumes that you keep the same amount of debt or start to pay it off.

Overall, a financially responsible person could benefit from a credit line increase because it can raise their credit score, which can lead to better loans or credit cards.

Is there a downside to asking for a credit line increase?

When requesting an increase of your credit limit keep in mind that this will not impact your credit scores in a negative manner. But, do make sure that this review of your account for approval of an increase in your credit limit is a ‘soft’ review or ‘soft’ inquiry.

If you do get a credit line increase, it may feel like you are improving your credit score, but in reality, you may still have debt to pay off.  People should be careful to not indulge in financial habits that put themselves in debt in the first place. It’s not unheard of for people to get a credit line increase and then spend more money as if they just got a pay raise. This cycle continues to put people in debt, and it’s important to learn to resist the urge to spend too much money.

How often should you request a credit line increase?

There’s no industry standard on how often you can request a credit line increase, but you should do so wisely. You’ll want to present evidence to the card issuer that you’re capable of handling a credit line increase. Some factors include paying your credit card bill on time, an increase in salary, or having a better credit score.

If you get rejected, you should wait 6-12 months before making another request.

Consult a credit expert to improve your credit score

A debt management plan can be essential to tackling debt without making unnecessary errors. Credit counseling will give you a personalized plan to improve your credit score. Our credit experts review your current financial situation, including your budget and debt, and offer actionable advice to improve your credit score.

At Improve Credit, our credit repair consultants are dedicated to helping you reach your financial goals. Get in touch with us for a free analysis.