Credit Limit Increase: When it Helps and When it Doesn’t

Do one thing: Before asking a lender to increase your credit line, think about the motivating factors behind the request and how it might affect your credit score.  

More Americans are Asking for Higher Credit Limits

In recent months, more Americans have been asking credit card issuers to bump up their credit limits, according to a New York Federal Reserve Bank report. In fact, the quarterly applications for higher limits on cards reached the highest point in October 2025 since the institution began tracking the applications in 2013 through a credit access survey.

Raising Limit to Boost Utilization

While receiving a credit limit increase can boost your credit utilization ratio immediately – that’s essentially the percentage of available credit you are using at any given time – it really only helps if you immediately stop using the card with the newly increased limit. 

Negative Impact

Plus, some people may not realize that using too much of their available credit can have a negative impact on their credit scores. That’s where the credit utilization ratio comes in.

Keep Your Score Solid

To keep your credit score up:

• Strive to use just 10% to 30% of the credit available to you at any time
• Why? Because lenders and credit card issuers like it when you don’t use too much of your available credit
• Often ding consumers when they utilize more than 30%

With that in mind, there are certain situations when getting a credit limit increase can be beneficial to your finances and some other times when it’s not.

When a Credit Increase May be Good

Samantha Mockford, CFP, AFC, an associate wealth advisor at Citrine Capital in San Francisco, shares some of the real-life scenarios when a credit limit increase might be beneficial and when it may not be:

Before Applying for Certain Loans

If you are applying for a home mortgage or car loan, and you would like the most favorable interest rate possible:

• You could request a credit increase as long as you don’t have plans to use it.
• Having a higher credit limit while using a small portion of that available credit will often result in a lower credit utilization, which can be helpful to your credit score.

For Rewards Points

If you are planning to make a large purchase for which you can pay cash:

• You’d prefer to charge the item to a credit card
• Then pay it off immediately
• Get rewards points

This situation would only be favorable as long as you paid off the item within the given grace period and before any interest accrued.

Consolidation

A credit limit increase can be beneficial for those who are consolidating credit cards. Lucas Wennersten, CFA, CFP,  owner and founder of 49th Parallel Wealth Management, notes:

• Consolidating cards likely won’t improve your utilization ratio
• The increased limit can help you consolidate down to two or three cards
• Holding fewer cards will help simplify your life
• Don’t get a credit limit increase if you will use it, and it will just put you in more debt

When a Credit Increase May Not Be Good

While certain scenarios are beneficial for a credit limit increase, there are also reasons not to.

To Spend More Money

It would probably not help your finances to do the following:

• Increase your credit limit simply to be able to spend more money
• If you are spending within your means, you should ideally have the cash available to pay off your credit card.

Because You Reach Your Credit Limit Often

Raising your credit limit because you are bumping up against it, says Mockford, is like seeing a dog strain against a taut leash and concluding that the problem is the leash length. You will likely have the same problem again with a longer leash. Instead, she explains, it’s important to control the spending, and then nearly any credit limit should feel sufficient.

Card Issuer Increases Your Limit

Credit card companies sometimes agree too readily to raising credit limits, says Mockford. Remember, they are for-profit businesses. Remember:

• When you spend money you don’t have, credit card companies collect interest payments
• The amount you owe often increases.
• Ideally, you should spend within your predetermined budget — not because of what your credit limit allows.