Will obtaining an increased limit impact my credit score?

Increasing your credit limit will positively impact your credit score, since it will reduce your overall credit utilisation. Maintaining a low credit utilisation buoys your credit score, since it demonstrates your credit responsibility. Previously we have discussed the problems with having bad credit history and here we will discuss the impact of increasing credit credit limits to your credit score.

Requesting for an increase in your credit limit could temporarily dent your score since banks will usually perform a ‘hard credit pull’ to see if you fulfil their criteria for a rise in your limit.

If you want to raise your credit limit on multiple cards, consider reducing this to one card that you use frequently/would benefit from an increase in limit. Having multiple hard pulls can dent your credit score significantly and also reduce your chances of getting all requests approved. This also indicates to banks that you’re desperate for credit, which could reflect poorly on future loan applications or credit extension requests.

However, if you keep your balance low and don’t overspend, this momentary dent will reverse itself within a few months.

Ensuring you pay your bills on time and maintain a low balance is key to keeping your credit score healthy, so try to pay off all outstanding amounts on your card irrespective of your credit limit.