Will Credit Limit Increase Hurt My FICO?

Question

I know that opening a new line of credit will hurt my FICO in the short-run, but will raising my credit limit on an existing credit card have the same effect? Would it count as "new credit"?

Jon Holdman · Answer

I was told to ask if they will examine my payment record and give me an increase without making any inquiries.  You don't want any inquiries.  Those will hurt your score.

Jon Holdman · Answer

I've been told it will help your credit score.  One of the factors in your score is the balance vs. the limits.  If you're under 50%, your score is better. Under 30% and better still.  So, if you get the limit raised, and don't charge anything more, your score will improve.

Scott Williams · Answer

A credit limit increase will not start the ageing process over, actually some creditors will even let you swap products, say BoA visa to BoA amex and keep your history.

The main negative as already said is the inquiry.

Be careful though..I have read reports in this economy of people seeking increases and getting decreases as the underwriter looks at their account.

If you have significant available credit you may be much further ahead to let sleeping dogs lie for the next year or so.

Brian Levredge · Answer

It shouldn't.  One of the bigger factors in the score is your debt to available credit ratio.  Having them under 50% is good but having them under 30% is even better for your score.  Of course, in reality you don't want to be carrying any debt.  Was the credit line increase given to you, or did you request it?  If you requested it, then there will be a hard inquiry on your record and that COULD lower your score.

Account Closed · Answer

I have also heard from people it will actually help your credit score as long as you stay within the 30-40% utilization factor.

Chris Scully · Answer

I haven't heard of anyone getting unsecured lines again, but it has to loosen up some time.

Bryan Hancock · Answer

Business credit is totally different than personal credit.  A Paydex score and scores from some of the other bureaus can be obtained quickly.  True underwriting from banks will depend on your global cash flow statement and the strength of your business.

I have heard rumblings of people actually getting unsecured lines again post craziness.  Has anyone got a line approved or raised recently?

Mark Beekman · Answer

Brian- I've been thinking of building my business credit, too. So what you're saying is that when I personally guarantee a credit line for my business it'll show an inquiry on my personal credit report? How long does it usually take to build up one's business credit to the same level as one's personal credit, assuming you're starting from scratch on the biz credit?

Brian Wall · Answer

You should really start looking at building your business credit.  If you personally guarantee the business credit (credit card, LOC, etc), it will show up on your businesses credit report, but not on your personal, so only the inquiry, and as mentioned, it is only temporary, and sometimes you can get an inquiry removed just by asking.

A good rule of thumb is that you should be able to get as much business credit, as you have personal credit.  Example, if you have $50,000 available credit, personally, you should be able to get $50k in business credit.

Of course, what everyone else said applies to, especially the 30% debt usage ratio.

Brian

Bill Gulley · Answer

IMO, not so. Your ability to borrow in the future is called a contingent liability. The credit folks know about what you income is, if you have filled out loan applications, it is stated.

Having an inquiry a few times a year depending on what it is, may not effect your score. Having the ability to borrow more than you can afford to repay will hurt your score.

Look at the interest rate and terms of lines of credit, look at the maximum loan you can atke out and what your ratios would be. Staying within the accreptable ratio for they types of financing, (RE, consumer loans) and not exceeding 20% of those ratios will keep you close to what would be an acceptable risk that you will go out and go on a spending spree. This is an underwriting issue and other factors will also come into play. Your use of creidt and your business/profession are also weighted variables. Having the ability to borrow more than you can afford to payoff on credit cards for example is not a plus with any creditor.

Will Credit Limit Increase Hurt My FICO?

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