You might have a great track record of paying your credit card bill on time, but your credit score will still suffer if you’ve used too much of your available credit. For a healthy credit score, the pros recommend using 30% or less of your available credit. To get an exceptional score, your aim should be about 10% (i.e. only charging $100 if your credit limit is $1,000).
Raising your credit limit is a sneaky way to pump up your score by making your existing debt a smaller percentage of your available credit. You might see a small, temporary dip in your score as your creditor will likely make a hard inquiry and pull your credit report before approving a higher limit. But over time, having a higher credit limit will make it easier to get your credit use into the 10% sweet spot.
But keep in mind that this little trick only works if you don’t use your newly available credit. If you’re struggling to reign in your spending or are in danger of maxing out your card, raising your credit limit might do you more harm than good.
On the other hand, if you feel like you’re on top of your budget and your credit, use the instant gratification of a limit bump as motivation to keep going!
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