Does Getting Declined for a Credit Limit Increase Affect Your Credit?

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Getting declined for a credit limit increase might impact your credit scores. Whether it does depends on if the card issuer reviews your credit report with a hard or soft inquiry before making their decision. If it's a soft inquiry, your credit scores won't be affected at all. However, similar to when you apply for a new credit account, a hard inquiry might hurt your scores.

How Asking for a Credit Limit Increase Works

The process for requesting a credit limit increase can vary depending on the credit card issuer, but it's not something that's typically difficult to do. Some companies let you make a request online, while others ask you to call a representative. You can often ask to raise your credit limit by a specific amount.

Credit card issuers aren't always clear about whether the request will result in a hard or soft inquiry, but some share this information online. For example, Barclays says a request for an increase could lead to a credit inquiry that "may have an impact on your credit score" (in other words, a hard inquiry). Capital One's website says the issuer only performs a soft inquiry that won't impact your credit score.

If you're unsure and can't find the information online, call your card issuer and ask whether it will use a soft or hard inquiry. You can also ask if it's likely that your request will be approved. However, they likely won't be able to guarantee a result before you make the request.

While a single hard inquiry can stay on your credit report for two years, the impact on your scores will be temporary and should not be a significant factor when you responsibly seek credit. Multiple inquiries in a short time period, on the other hand, can be a cause for concern when it comes to credit cards.

How Does Your Credit Utilization Impact Your Credit Score?

Your credit utilization rate is a comparison of your balances and credit limits on revolving accounts such as credit cards. Your utilization rate may increase if you close a credit card or the issuer lowers your credit limit and your balance stays the same. Conversely, increasing your credit limit could lower your utilization rate.

Your utilization rate is an important scoring factor, and using a small portion of your available credit is best for your credit scores—which is why a credit limit increase might help you improve your scores. Lowering your utilization rate is also one of the few things you can do that may quickly improve your credit scores.

For example, if you have four credit cards with a combined credit limit of $20,000 and a combined balance of $5,000, your utilization rate is 25%. However, if your total credit limit is increased to $30,000, your utilization rate drops to about 17%. Your card issuers may report the changes around the end of your cards' next billing cycles, and your credit scores could then reflect the lower utilization rate.

All that said, increasing your credit limits won't necessarily help your credit scores if you wind up increasing your card balances as well. If a higher limit might lead you to spend more, requesting a credit limit increase might not be a good idea.

Reasons Why Your Credit Limit Increase May Have Been Denied

When you request a credit limit increase, the card issuer may review your credit reports, credit scores, how you use credit cards, your history with the company, and the income information it has on file. (If your income has increased, you may want to update your information before requesting a credit limit increase.)

Credit card companies might deny your request or offer a smaller increase than you wanted for various reasons, including:

  • The credit card account is only a few months old
  • You requested and received a credit line increase in the past few months
  • You have a low credit score
  • Your income isn't high enough
  • You don't use the card often
  • You rarely pay more than your minimum monthly payment
  • You've missed a payment or are currently past due on this or another credit account

When you're denied a credit limit increase due, at least in part, to your credit information, you might be sent an adverse action letter. If the lender used your Experian credit report in their decision-making, receipt of an adverse action letter means you have the right to request a free copy of your report, which you can do on the Experian's Report Access page. If a report from one of the other major consumer credit bureaus (TransUnion or Equifax) was used, you can request a copy of your report from those companies as well.

The letter will also explain why the card issuer denied your request. Addressing any issues included in that explanation may increase your chances of getting approved later, although it's no guarantee.

You can also call the card issuer and ask about your other options. For example, if you have multiple credit cards from the same issuer, you could be declined because your combined credit limit is too high. Rather than getting an increase, you may be able to move available credit from one card to another.

Check Your Credit Score for Free

While card issuers consider various information when you request a credit line increase, your credit scores could be an important factor. Monitoring your scores—along with your card usage and reporting income increases—could help you determine when it's a good time to make the request. You can check your FICO® Score from Experian for free and get personalized suggestions on how to improve your score.