If you have a credit card, chances are good that you’ve wished for a higher line of credit at some point, even if you don’t plan to use the extra credit. Being able to get a credit line increase can do a lot of positive things for you both with your credit report, and in other ways.
Since part of your credit rating is based upon how much credit you have available vs. how much you’re using, a higher limit can drop what’s called your credit utilization, resulting in a better rating. Having higher credit limits also opens doorways to higher-end credit cards that offer rewards, concierge services, or airline miles.
The problem with asking for a credit line increase is that a “hard credit pull” is often used to determine your suitability for that higher line of credit – and a hard pull not only shows up on your credit report but can drop your score by as much as five points for the next six months.
What’s Wrong With a Hard Pull?
If you apply for credit with multiple companies doing hard inquiries, you can significantly decrease your score and leave creditors who see your report with the impression that you’re in a financial bind and might not be able to pay it back.
A soft pull, however, is when a company or lending institution checks your credit but doesn’t leave a mark on your report. Soft pulls are often done by employers during background checks, or by credit card companies sending you offers in the mail. They don’t affect your score, and don’t look bad on your report because they don’t show up at all.
If your goal is to get a credit limit increase without a hard pull, you’ll want to avoid asking for more credit from companies that use hard credit inquiries. There’s no way around what a hard pull will do to your credit, and since many companies default to a hard pull on credit line increase requests, it can be difficult. There are, however, ways to increase your credit limit without a hard pull. In fact, some forums offer guides to maximizing your chances at getting those big increases.
Can You Avoid Hard Pulls?
American Express is one credit card company that uses soft pulls for credit line increases. Capital One, Citi, and Discover also may do a soft pull when you ask for a larger credit line. In most cases, however, you’ll want to call the company directly and ask if they use a hard pull for an increase. Since you’re trying to avoid a hard inquiry, you’ll want to know before requesting one. Bank of America, BarclayCard, and Chase use hard pulls in all situations, so you’ll want to avoid them.
Some cards, like American Express, often do an automatic increase after 60 days or 6 months if the payment history is good. For some, it may be a better option to simply wait and see if the company automatically offers an increase. Since a hard credit pull must have your authorization (such as an increase request), waiting for the offer can save your credit report from a hard pull.
Whether you wait and see, or call your card issuer, getting a credit line increase doesn’t have to drop your credit rating. Just make sure you know exactly how your lender will handle an increase request before giving the go-ahead.