Increasing Credit Line??

[firemartinez1980]

How does increasing credit lines affect your overall credit profile and score??

For instance, I currently only have 2 credit cards, both with a $1000 limit and each have about a $50 balance as of now. My credit score is right around 700 with no debt other than my auto loan.

If I apply for a new card, say home depot for instance or bestbuy and I get $5000 credit line.....Does this hurt me even if I don't use it?

[TGG_1976]

If you get a new card but keep your current credit consumption, your overall utilization will decrease and this will benefit your score. Yet, you might get a temporary, short term ding due to the additional inquiry (HP). 

[1GaDawg85]

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@firemartinez1980 wrote:

How does increasing credit lines affect your overall credit profile and score??

For instance, I currently only have 2 credit cards, both with a $1000 limit and each have about a $50 balance as of now. My credit score is right around 700 with no debt other than my auto loan.

If I apply for a new card, say home depot for instance or bestbuy and I get $5000 credit line.....Does this hurt me even if I don't use it?

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Increasing the amount of credit does help in the long run. But let's focus on the 2 cards that you have right now. Who are they with? How long have they been opened? What are your goals with credit (both short term and long term)? Also, you mentioned an auto loan. How old is that? How much do you owe on it? The more data points we have, the more the community can provide some guidance and you may even answer your own question. 

[blindambition]

As stated, extra available credit lowers aggregate utilization. That's if not adding additional debt with new card.

Since profile is so thin, a minor dip in score from HP, along with another when new account reports.

ETA: Current limits would most likely not net a 5k limit on either of those cards, which are backed by Citi Retail. Both get conservative limits. BB nets a $4k limit on a thick file.

[SouthJamaica]

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@firemartinez1980 wrote:

How does increasing credit lines affect your overall credit profile and score??

For instance, I currently only have 2 credit cards, both with a $1000 limit and each have about a $50 balance as of now. My credit score is right around 700 with no debt other than my auto loan.

If I apply for a new card, say home depot for instance or bestbuy and I get $5000 credit line.....Does this hurt me even if I don't use it?

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1.  First, it needs to be said that if you have only 2 cards, you should let one of them report a zero balance while the other reports a $50 (or $100) balance. That will boost your scores.

2. Adding a new card has certain short term negative effects, due to the inquiry, the reset of the age of newest account, and lowering of average age of accounts. But those effects wear off.

3. As @TGG_1976 points out, it has the positive effect of increasing your available credit, which lowers your utilization percentage.

4.  Having a 3rd card gives you an additional opportunity to further optimize your scores, by reporting 2 zero balances while allowing only the 3rd to report a small balance before you pay it off.

[AndySoCal]

@TGG_1976  If my quick calculations are correct the OP has 2000 (2 credit cards 1000 credit limits on each in availible credit and about $100 balance on both cards. My calculation would the credit utilization would be about 5%. If the OP opened an new account  the score would drop my estimate 20 points +  few points where the inquiry was made at. It would affect the average of accounts as well.  So opening an new account would have very little impact on score as related to credit utilization. To me the ding in the score is not worth it.

@firemartinez1980 

I would consider asking for a credit limit increase depending on how long you have credit cards. If you have had the cards for more than a year I would consider that route providing it is a soft pull so the inquiry wont affect the score. Some on the forum will disagree with that. I say this because the longer the payment history it helps in the decisioning on wether to grant a credit limit increase or not. I personally do not ask for credit limit increases that often. My last credit limit increase that I asked for was in 2017. Just saw your other post related to Credit One. Either path you choose it would be better not to have that recent 30 day late.

So I would wait until that is resolved.

[Anonymous]

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@TGG_1976 wrote:

If you get a new card but keep your current credit consumption, your overall utilization will decrease and this will benefit your score.

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Not necessarily true, as the OP already appears to run extremely low utilization.  Additional credit will increase his overall limits (denominator) and with an equal numerator his utilization percentage will drop.  This however may or may not benefit his score.  My guess is it wouldn't based on his already excellent utilization.  If it did help, it would be a couple of points tops. 

SJs point for him to report a balance on just 1 of the 2 cards is solid and if OP does app for another card he'd want to do this prior in order to position his profile in the best light for that app.