How does increasing your credit line pull down your credit rating?

Increasing your credit limit with an existing account will not drop your credit scores. It will help your scores.





Adding new accounts could drop your scores if you have a thin file - short history and only a few accounts in good standing.


You would take a hit for the inquiries and then if approved you would take a hit when the new account reports.





If you have a thick well rounded file with long history on many accounts, you may not see much of a hit or you may actually see a rise when the new account starts to report.

How does increasing your credit line pull down your credit rating?
pedrum's answer is great.





But the "high credit lines = higher risk" part is no myth.





Lets say you have $50k in annual income, but you have $300k in available credit limits. That will scare the heck out of a mortgage lender. That fact is reflected in your credit scoring formula. You do want to have a lot of limit, but you don't want to overdue it.
Reply:When you have access to too much credit you are less likely to be approved for more credit cards. Your credit score is also lowered
Reply:It won't as long as you don't run up your debt...Unless you mean by asking for more and more credit cards and you keep getting turned down but as long as your debt to income ratio stays low then it shouldn't be a problem
Reply:Look up the term "credit utilization rate"





You will see that what the previous posters stated is true, in that it will not decrease your credit score, unless you utilize that increased credit limit.





For the most part, you want to have more credit, larger lines. I think it's an urban myth that high credit lines = higher risk because you can go out and spend a ton of money then default. But think about it. The people who have the most credit, the biggest budgets, they also have huge credit lines (or unlimited credit lines).





High credit limits with low utilization rates = GREAT!
Reply:It doesnt. Having a higher credit line improves your credit score. It sais so right on your credit report.





How you handle that debt is up to you. If you max out your card and struggle to pay your bills your score will suffer. But if you are resposible your score goes up.

ginkgo