Does Increasing Credit Limit Affect Credit Score

Does Increasing Credit Limit Affect Credit Score

Your credit limit is the maximum amount you can borrow on a credit card or revolving credit account. If you’ve recently been offered a credit limit increase — or are thinking about requesting one — you might be wondering whether this change will impact your credit score. The answer is: yes, increasing your credit limit can affect your credit score, and in most cases, the effect is positive.

In this article, we’ll explain how credit limits work, the relationship between your limit and your credit score, and when increasing your credit limit might help or harm your financial profile.

What Is a Credit Limit

A credit limit is the maximum amount of money you’re allowed to borrow on a credit card or similar credit account. For example, if your credit limit is £3,000, you can spend up to that amount — either in one go or gradually — but you’ll need to stay within that boundary to avoid penalties and protect your credit rating.

Most lenders set your initial credit limit based on:

• Your income and employment status

• Your credit history

• Existing debts and financial commitments

• Internal affordability checks

Over time, you may be offered a higher limit, especially if you’ve demonstrated responsible usage and consistent repayments.

How Increasing Your Credit Limit Can Help Your Credit Score

When used sensibly, a higher credit limit can have a positive effect on your credit score because it improves one of the key factors used in credit scoring: credit utilisation.

1. Lower credit utilisation ratio

Credit utilisation is the percentage of your available credit that you’re currently using. For example:

• If you have a £2,000 balance on a £4,000 credit limit, your utilisation is 50%

• If your limit increases to £6,000 and your balance stays at £2,000, your utilisation drops to 33%

A lower utilisation rate is seen as a sign of responsible borrowing and can improve your credit score. Most experts recommend keeping your utilisation below 30% of your total credit limit.

2. Improved lender perception

Having more available credit and not using much of it shows lenders that you're not dependent on borrowing and that you manage credit sensibly. This can increase your chances of being approved for loans, mortgages or higher-value credit products.

When a Higher Credit Limit Could Harm Your Score

While increasing your credit limit is generally beneficial, there are situations where it could have a negative or neutral impact.

1. Hard credit checks

If you request a credit limit increase and the lender performs a hard search, this will be recorded on your credit file and could temporarily reduce your score. However, many providers use a soft search, which does not affect your score or appear to other lenders.

It’s worth asking your lender which type of check they will perform before you request an increase.

2. Temptation to spend more

More available credit can lead to more borrowing, especially if you’re tempted to use the extra limit to make unnecessary purchases. If your balance increases as your limit increases, your utilisation rate may stay the same or get worse, which can negatively impact your score.

3. Multiple credit limit increases or new accounts

Applying for several credit limit increases or opening multiple credit cards in a short time can make you appear financially overstretched. This may reduce your credit score and raise red flags for future lenders.

Real-World Example

Lewis had a credit card with a £3,000 limit and a balance of £1,200, giving him a 40% utilisation rate. His lender increased his limit to £5,000 without a hard check. His utilisation dropped to 24%, and within two months, his Experian score increased by 36 points.

However, his friend Claire requested a limit increase and was subject to a hard credit check. Her score dipped slightly, and she later spent more than intended using her new limit. Her utilisation rose above 70%, and her score dropped by over 50 points.

Should You Accept a Credit Limit Increase

Before accepting or requesting a higher limit, consider the following:

Accept the increase if:

• You don’t plan to increase your spending

• You want to reduce your credit utilisation

• You’re preparing for a major credit application (e.g. mortgage)

• There’s no hard search involved

Think twice if:

• You’re likely to be tempted to overspend

• The increase involves a hard credit check

• You already have high levels of available credit across multiple cards

• You’re applying for other forms of credit soon

How to Increase Your Credit Limit Responsibly

• Use your card regularly and repay in full or on time

• Wait at least 6 months between limit requests

• Avoid carrying high balances

• Check your credit report for accuracy

• Ask your provider whether a hard search will be used

• Don’t accept every increase — only take what you need

Final Thought

Increasing your credit limit can improve your credit score, especially if it helps reduce your credit utilisation ratio. However, the benefit depends on how you manage the additional credit. If you continue to spend sensibly, keep repayments on track and avoid maxing out your card, a higher limit can work in your favour.

On the other hand, if a bigger limit leads to bigger debt, it could hurt your credit standing. The key is not the limit itself, but how you use it.