Increase your credit limit by exhibiting

Your credit limit may be raised if you exhibit timely and do full repayments. However, having a high credit limit and multiple lines of credit may hurt a person’s overall credit rating. In these cases, new potential lenders can see that the applicant has access to a large amount of debt, which may lower the chances that this person will be able to repay his or her debts in the future. As a result, new potential lenders might be less likely to offer an additional source of debt.

Information required by lenders

Relying upon the credit increase amount that is requested and the length of time the borrower has held the line of credit, a lender may ask for information directly from the borrower, pull a credit report or use information it already receives from the credit bureaus each month. Such information as employment status, income and housing expenses will be requested of the borrower. The lender may also look at the borrower’s payment history, including whether payments are made on time, how much credit is regularly used and how often the balance is being paid.

What influence your request?

Your request could be affected negatively for a credit increase if you are subjected for making late payments from the previous six months; whereas monthly payments that are a higher percentage of the balance have a favourable effect. The financial institution considers the client total amount of debt; the number of other lines of credit; the number of other requests for credit that have recently been reported to the credit bureau.

Conclusion

In case, your request gets refused then a credit increase may negatively affect your credit score, because the request is reflected in your credit history for a short time. If a request is denied because the current amount of credit is too high, then an increase can be requested again once some of the balance has been paid.

Source: Secondary