When considering an account for a credit line increase, you should look at a variety of factors such as your on-time payment history, average monthly payment amount, credit bureau information, and credit score. You should also see whether you use a significant portion of your existing credit line. If you regularly use your card and make payments on time, it builds your account's payment history. If not, your creditor may not have sufficient payment history to review.
Two of the important factors that help determine your eligibility for a credit line increase are in your control: on-time payments and making substantially more than your minimum payment every month.
Credit Card Utilization Ratio
Your credit increase inquiry could have a minor and temporary negative impact on your credit scores. But you can’t consider the inquiry in isolation. If your request is approved there are other important changes that could have a more significant impact on your credit scores.
For example, when you increase your credit line, you immediately will reduce your overall credit utilization rate. Your utilization rate is the ratio of your credit limits to your overall balances.
A lower utilization rate often will have a positive impact on your credit scores. As a result, the lower utilization rate resulting from the credit limit increase likely will reduce or offset any negative impact caused by the inquiry.
However, if you then increase your balance because you have a higher limit, then you not only won’t have improved your utilization rate, but you will have added to your total outstanding debt. That could decrease your scores.
