Does your credit score drop if the credit card company increases your credit limit?

Answer 1

No. As long as you continue to pay at least the minimum payment (preferably more) on your card every month, and don't make any late payments, your credit score will not go down.

The credit card company is raising your limit because you have proven yourself to have good credit by paying your bills on time. The higher your credit goes, the higher your limit will rise, because they want you to be able to spend more money so that they can make more money on interest.

My reccomendation is to call them and tell them to lower the limit back down. Nobody should ever need to be so far into debt that they need a raised credit limit, and if you get to that point, you are probably going to be in trouble. However, if someone gets their hands on your card, and uses it illegally, they will be able to do a lot more damage if you have a higher limit.

Unless you plan to put an extremely large purchase, such as an automobile, on your credit card, I would advise lowering the limit back down. You don't need a higher limit for every day spending, and for many people it is too tempting to use that extra money available, which can get you into financial trouble down the line.

Answer 2

Your credit score does not drop... however, loan institutions look at several factors besides the credit score.

1) Credit Score - how well have you handled credit in the past.
2) Outstanding Debt - this is dept you have already acquired and currently required to pay back.
3) Income - This is verifiable income from steady sources.
4) Debt to Income - Take your total month payments for all your debt and divide that by the total income. This is your D2I ratio.
5) Available Debt - This number is a bit arbitrary and some institutions use it and some don't. This is where your questions comes in. This is debt that you have been granted but not used yet. This could be a line of credit from a bank and/or total line of credit available for all your credit cards.

Loan institutions only become concerned with #5 if the other factors place your risk just below acceptable limits. The concern there is if they make the loan to you and then you run up the other credit vehicles their loan could be at risk.

Hope this helps!

Answer 3

Not necessarily, however, you should read the "terms and conditions" pamphlet they give you when increasing your credit limit, because usually, this document becomes your new agreement with that particular credit card company. This is why they send so many new offers of credit to the same people, "oddly and for obvious reasons at the same time." What I mean by that is...Have you ever gone through a period of poor credit, yet you continually get offers from the same companies, including one you may have a current credit card with already? These documents contain very small details hidden in the fine print that allows them to up the interest rate currently payable, unless you are in the initial six month period and have not been late even once. The minute you receive on of these, send it back stating you do not want the particular credit offer, and then have them take you off of their email, mail, and phone prospecting lists. After all if you have a current card with them, they should have it already.

Answer 4

There somewhat isn't something honest approximately FICO. Even people who're to blame and ought to enable a bill slip with the aid of fact, say, their baby mandatory an ER flow to, have their scores drop with the aid of fact that's approximately numbers. in spite of the incontrovertible fact that throughout your case, that's with the aid of debt to credit line ratio. with the aid of fact the credit line has been decreased, the ratio will become smaller, subsequently lowering the score. the main suitable ingredient? Get the credt lines greater. that's no longer honest in any respect, as you have stored up with each and every thing, yet with how the device works, it screws many. they're in all likelihood reducing each and every thing reason of the economic state. each and every person is freaking out approximately funds, so... additionally particular mastercard places will in basic terms record how lots you owe, making it look you have lots greater debit than you somewhat do, that may harm your score. because they're reducing your quantity, even although you're paying it off, it could nonetheless tutor which you have a severe stability with the aid of reducing. i'm hoping those tid bits have helped.

Answer 5

No..as a matter of fact it may help to increase your score.

30% of your credit score is based on your used credit to available credit ratio.

Answer 6

Strangely, when I was talking to the bank, about a construction loan, my credit score would have been higher if I had more debts - all I had was 1 morgage & 1 car loan & nothing else.

Answer 7

Not usually. Only if you spend more. Your debt to credit ratio is important.