topic Re: Why would my score decrease with higher credit limit? in Understanding FICO® Scoring

Why would my score decrease with higher credit limit?

Rith — Thu, 18 Aug 2022 14:06:35 GMT

Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

Re: Why would my score decrease with higher credit limit?

GatorGuy — Thu, 18 Aug 2022 15:28:44 GMT

The credit simulators are completely unreliable. You would not lose points for increasing credit limits.

Re: Why would my score decrease with higher credit limit?

Rith — Thu, 18 Aug 2022 15:51:21 GMT

Oh! That is good to know! Thank you very much!

I was hoping to use them to educate myself on what I should and shouldn't do. Do you have any recommendations on how to raise my score? Like, indeed, raising my line of credit with existing cards?
Thank you!

@GatorGuy wrote:
The credit simulators are completely unreliable. You would not lose points for increasing credit limits.

Re: Why would my score decrease with higher credit limit?

SouthJamaica — Fri, 19 Aug 2022 02:42:20 GMT

@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

1. Simulators are rubbish.

2. Your scores would not decrease with a higher credit limit.

Re: Why would my score decrease with higher credit limit?

Rith — Fri, 19 Aug 2022 11:36:27 GMT

Thank you so much! That's good to hear.

@SouthJamaica wrote:
@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

1. Simulators are rubbish.
2. Your scores would not decrease with a higher credit limit.

Re: Why would my score decrease with higher credit limit?

GatorGuy — Fri, 19 Aug 2022 12:00:12 GMT

Long term adding a 3rd credit card and an installment loan would help you maximize your scores. Ideally you would only let one credit card report a small balance each month. You don't have to carry a balance or pay interest though. From there just give it time and let your score grow. To get high credit limits the best thing you do is use your cards as heavy as possible and pay in full each month.

Re: Why would my score decrease with higher credit limit?

MrFiah — Fri, 19 Aug 2022 18:04:02 GMT

Agreed with everyone else that simulators are unreliable but you might see a small dip in your scores in the event that a HP is done for the CLI.

@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

Re: Why would my score decrease with higher credit limit?

FireMedic1 — Sat, 20 Aug 2022 08:45:36 GMT

Welcome to the forums @Rith

Think of yourself as a teenager who got their first card. Right now your brand new to the credit world. You'll want to build a strong foundation and go from there. Main thing no baddies as you grow your profile. Move slowly without rushing to grab all thats out there. Theres no rush. Its a marathon and not a race as we say. For now your looked at as a young and thin file. It will take a few yrs to have a solid file. As mentioned. Three cards and any type of loan. If you have a auto loan or any other loan right now. More loans dont mean higher scores. Put your effort into building a file. The scores will follow. Scores decrease when you let too high of a balance report on your cards compared to your credit line.

Re: Why would my score decrease with higher credit limit?

Anonymalous — Sun, 21 Aug 2022 09:04:48 GMT

@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

Are those your FICO 8 scores? Just be aware mortage lenders tend to use FICO EX 2, TU 4, and EQ 5. They often take the middle of the three scores.

But those are good scores, you're probably fine. Just keep doing what you're doing. You're not in the ideal range (760+), but that would be tough to achieve with your short credit history. In the long term you might want to add an extra card or three, but if you're going to be applying for a mortgage in under 12 months, don't even think of adding any new lines of credit. Mortgage scores are also sensitive to utilization, so keep it very low. Raising your limits is a good thing not a bad thing, and will help with utilization.

Re: Why would my score decrease with higher credit limit?

Rith — Fri, 16 Sep 2022 08:35:40 GMT

Thank you all so much!

Re: Why would my score decrease with higher credit limit?

Beefy1212 — Fri, 16 Sep 2022 11:28:50 GMT

@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

The simulator assumes those credit limit increases come with hard inquries, this is not common on cards anymore. The simulated score drop is from calculated hard inquiries.

Re: Why would my score decrease with higher credit limit?

FireMedic1 — Fri, 16 Sep 2022 12:05:21 GMT

@Beefy1212 wrote:
@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

The simulator assumes those credit limit increases come with hard inquries, this is not common on cards anymore. The simulated score drop is from calculated hard inquiries.

@Beefy1212If there is no HP. And its a SP CLI. No harm. Points arent taken away for estimating there was a HP. And we all know simulators arent reliable.

@RithAfter re-reading your repsonce. Having all cards report no balance. Your getting the all zero penalty. One card (MC/Visa/Disco) needs to report a balance of <6% for best scoring. Once you have 3 revolvers. It will help even more. FICO likes <50% of the total cards reporting a balance.

Re: Why would my score decrease with higher credit limit?

Rith — Fri, 16 Sep 2022 12:34:07 GMT

@Beefy1212 and @FireMedic1 Thank you so much! It's difficult to figure this system out, so your responses are so helpful.

Re: Why would my score decrease with higher credit limit?

Beefy1212 — Fri, 16 Sep 2022 19:34:37 GMT

@FireMedic1 wrote:
@Beefy1212 wrote:
@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

The simulator assumes those credit limit increases come with hard inquries, this is not common on cards anymore. The simulated score drop is from calculated hard inquiries.
@Beefy1212If there is no HP. And its a SP CLI. No harm. Points arent taken away for estimating there was a HP. And we all know simulators arent reliable.
@RithAfter re-reading your repsonce. Having all cards report no balance. Your getting the all zero penalty. One card (MC/Visa/Disco) needs to report a balance of <6% for best scoring. Once you have 3 revolvers. It will help even more. FICO likes <50% of the total cards reporting a balance.

I am aware the simulators are iffy, I was answering the question as to why the simulator in that specific case would lower the score.

As for utilization it is 4.49% not <6% for highest score anything 4.5% and above carries some sort of penalty and all scoring thresholds are technically .51% lower than stated since fico rounds to the nearest whole number.

Re: Why would my score decrease with higher credit limit?

OmarGB9 — Mon, 26 Sep 2022 05:00:29 GMT

@Beefy1212 wrote:
@FireMedic1 wrote:
@Beefy1212 wrote:
@Rith wrote:
Hello,
I moved here from Europe and am just getting used to Fico scores. I opened 2 credit cards last year. Length of credit history is 1 year and 2 months. I was trying the Fico simulator to see what I can do to increase my score (btw, would love to know how, if you have any advice!).
When I tried to simulate raising my credit limit on existing cards by any amount, the simulator predicted a drop of 10-15 points in Fico Scores!
Why would that happen? I thought that was a good thing! I'm a little scared now, because my cards randomly increase my limit every once in a while, and I'm trying to raise my scores for a mortgage!

Overview: 1.2 year length of history, two credit cards only, no late payments ever, not yet letting one card go to statement, but planning to start soon. Current scores: Eq: 736 TU: 743 Exp: 721

I would highly appreciate any advice! Thank you!

The simulator assumes those credit limit increases come with hard inquries, this is not common on cards anymore. The simulated score drop is from calculated hard inquiries.
@Beefy1212If there is no HP. And its a SP CLI. No harm. Points arent taken away for estimating there was a HP. And we all know simulators arent reliable.
@RithAfter re-reading your repsonce. Having all cards report no balance. Your getting the all zero penalty. One card (MC/Visa/Disco) needs to report a balance of <6% for best scoring. Once you have 3 revolvers. It will help even more. FICO likes <50% of the total cards reporting a balance.
I am aware the simulators are iffy, I was answering the question as to why the simulator in that specific case would lower the score.

As for utilization it is 4.49% not <6% for highest score anything 4.5% and above carries some sort of penalty and all scoring thresholds are technically .51% lower than stated since fico rounds to the nearest whole number.

I've never heard of 4.49% being a threshold. I've only ever seen 8.9%, 28.9%, 48.9%, 68.9%, and 88.9% for revolving accounts.

Re: Why would my score decrease with higher credit limit?

FishingGuy — Sat, 01 Oct 2022 13:08:42 GMT

I agree with all the above advice, add a third card, go slow, use and pay them off, strategically ask for soft pull increases if the cards you have offer them...... and acquire a loan. but, if you don't need a loan.... don't go out and borrow money that you don't need. However look into a "self-lender loan" from one of the credit unions or financial institutions that offer them.

It is really like a holiday club where you make a deposit every month ( think of it as savings ) for 12 months or so. At the end of the period, you get those funds returned..... less some fees. It however reports as a loan for a fixed period and payment amount as well as the total end amount, and reports monthly as it is being paid off "as a loan".

I would set one of them up for the highest amount that you can comfortably & easily afford to save. It is definitely worth the small fees you pay and will help build your credit substantially for the long term.

Re: Why would my score decrease with higher credit limit?

RobynJ — Sat, 01 Oct 2022 15:56:09 GMT

This is what i did to get my scores above 770 in less then 8 months. My current scores are in my signature

Read this post and hope it may help you.

Re: My build from a blank file to 783/818 in 6 mon... - myFICO® Forums - 6584553