Does increasing your credit limit affect your credit score?
Written by
Emily Tye
Reviewed by
Amy LancashireYes, increasing your credit limit can affect your credit score in two ways. In the short term, your score may dip slightly if your lender runs a hard credit check. In the long term, a higher limit can boost your score by reducing your credit utilisation ratio. The net effect is usually positive, as long as your spending stays roughly the same.
How does a credit limit increase affect your score?
There are two mechanisms at work, and they pull in opposite directions.
The hard check – a short-term dip
If you request a credit limit increase, your lender may run a hard credit search on your file. This leaves a mark that other lenders can see, and it can cause a small, temporary drop in your score.
A single hard search rarely causes serious damage. The score drop is usually small, and if the increase is approved, the utilisation benefit tends to outweigh it.
The utilisation ratio – a long-term boost
UK credit reference agencies (Experian, Equifax and TransUnion) factor credit utilisation into your credit score.
Your credit utilisation ratio is simply the percentage of your available credit you are currently using. For example, spending £500 when you have a £1,000 credit limit means you have a credit utilisation ratio of 50%.
A higher limit, with spending unchanged, automatically brings that ratio down. Here is a simple illustration:
Scenario | Credit limit | Balance | Utilisation |
|---|---|---|---|
Before increase | £2,000 | £600 | 30% |
After increase | £4,000 | £600 | 15% |
In this example, the balance has not changed, but the utilisation has halved.
A lower ratio generally strengthens your credit score as it shows lenders you can access credit without depending on it heavily. Experian UK recommends using no more than 25% of your credit limit each month.
Note: Your credit utilisation ratio is calculated across your entire credit profile, not just one card. So a limit increase on one credit card can improve your overall ratio, even if your other balances stay the same.
One thing to be aware of: if a higher limit leads you to spend more, your utilisation may not drop at all. The benefit only holds if your balance stays roughly where it was before the increase.
Hard or soft credit check – what is the difference?
Not every credit limit increase triggers a hard credit check. Understanding the difference matters, because it changes what happens to your score.
A hard credit check is a formal search of your credit file. It is recorded and visible to other lenders for 12 months to two years, depending on the credit reference agency. It can cause a small, temporary dip in your score.
A soft credit check is used to assess your eligibility without leaving a visible mark. Other lenders cannot see it, and it has no impact on your credit score, regardless of how many are done.
Which type of check you get may depend on how the increase comes about. For lender-initiated increases, a soft search may be used (though it varies, so check with your lender if in doubt). If you contact your lender to request a higher limit, they are more likely to run a hard check.
What happens if my credit limit increase is refused?
If your lender turns down your request, the hard search still stays on your credit file – if one was carried out. You do not get the utilisation benefit of a higher limit, and the small score impact from the check remains.
This is worth thinking about before requesting an increase. If your credit score is already low, or you have had several hard searches recently, it may be worth waiting a few months first. Our guide to what affects your credit score covers the factors worth focusing on before applying for additional credit.
Should I accept a credit limit increase?
In many cases, yes – particularly if the offer comes from your lender without you having to ask for it. A credit limit increase is often seen as a signal that you have been managing your credit well, and used correctly, it can be a straightforward way to lower your utilisation ratio. The most important thing is to check whether your lender would carry out a hard or soft search before you request an increase, particularly if you are building your score ahead of a big application like a mortgage.
If you are thinking about requesting an increase yourself, consider:
Your current utilisation. If it is already well below 25%, the score benefit will be modest.
Your recent credit applications. Multiple hard searches in a short period have a compounding effect. If you have applied for other credit recently, it may be worth waiting.
Your spending habits. A higher limit only helps your score if you do not use the extra headroom to spend more. If you do increase your spending, you could also end up paying more in interest on a higher balance.
Any upcoming credit applications. If you are about to apply for a mortgage or a loan, avoid unnecessary hard searches beforehand.
A credit limit increase is a useful tool, but it is one factor among many. For a broader view of how to build your score over time, read our guide to how to improve your credit score.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
