Typical Credit Limit Increase (CLI) Effect on Credit Score?

[Jazee]

Does a Credit Limit Increase always improve your credit score or are there circumstances it can lower it?

More specifically, I have 3 credit cards (one is 15 years old, one is 6 months old, and the other is 3 months old) for a total of $14,500 in available credit.  I have an Auto Loan and no other credit accounts.  My utilization on each card is no greater than 7% and my total utilization on all cards combined is 4%.  My Debt to Income ratio is 7% excluding rent payment, 28% including rent payment.  

I want to get one more card that has travel-related points/cashback/benefits and was planning on applying for it in about 3 months.  I know the card I am applying for will do a hard pull from Trans Union.  My 6-month old card is an Amazon Store Card and I requested and got a CLI after 3 statements.  

My question is, would I have a good chance of improving my TU score by requesting a second CLI from Synchrony (which is a soft pull) and waiting for the higher limit to report, before applying for my second card from NFCU?

[Anonymous]

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@Jazee wrote:

Does a Credit Limit Increase always improve your credit score or are there circumstances it can lower it?

More specifically, I have 3 credit cards (one is 15 years old, one is 6 months old, and the other is 3 months old) for a total of $14,500 in available credit.  I have an Auto Loan and no other credit accounts.  My utilization on each card is no greater than 7% and my total utilization on all cards combined is 4%.  My Debt to Income ratio is 7% excluding rent payment, 28% including rent payment.  

I want to get one more card that has travel-related points/cashback/benefits and was planning on applying for it in about 3 months.  I know the card I am applying for will do a hard pull from Trans Union.  My 6-month old card is an Amazon Store Card and I requested and got a CLI after 3 statements.  

My question is, would I have a good chance of improving my TU score by requesting a second CLI from Synchrony (which is a soft pull) and waiting for the higher limit to report, before applying for my second card from NFCU?

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A CLI by itself won't increase your credit score.  It can raise your score if it lowers your utilzation past a certain threshold.  

[Ficoproblems247]

CL has no bearing on your FICO score in an of itself. It is only beneficial when it causes you to cross a utilization threshold. What it can help with, however, is possibly increasing your chances of an approval with a greater SL when applying for your next card. Some lenders pay more attention than others, but to an extent higher limits seem to warrant a better chance of a higher limit approval from your next app. It's always very much YMMV, and every situation is unique however. 

[dragontears]

Agree, you already have low utilization, a CLI isn't going to increase your score. 

[Jazee]

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@Ficoproblems247 wrote:

What it can help with, however, is possibly increasing your chances of an approval with a greater SL when applying for your next card. Some lenders pay more attention than others, but to an extent higher limits seem to warrant a better chance of a higher limit approval from your next app. It's always very much YMMV, and every situation is unique however. 

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That's sort of what I meant on the CLI effect is, would a higher aggregate total for available credit or average available credit per account have a positive effect on score directly or indirectly?

I've been reading a lot of posts and I can say I've seen a pattern in the Approval forum of typically people with high amounts of total available credit, even if they have like 12+ credit cards, tend to get significantly higher starting limits on new cards.  I suppose this is due to a lender see that they have a decent score (over 700)  and a lot of available credit combined with an average age not being to low, it's an indicator the applicant has been able to "handle their credit" to that point.

I also ran across some posts in a recent search where people thought a CLI decreased their score and after further discussion, they realize the decrease wasn't due to the CLI, it was just a coincidence the CLI happened about the same time something else changed in their credit file that they didn't realize could lower their score.

I think the bottom line is the better question for my purpose is, as long as it is a Soft Pull, would a recently reported CLI never hurt your score and approval odds when applying for an additional card?

[dragontears]

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@Jazee wrote:

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@Ficoproblems247 wrote:

What it can help with, however, is possibly increasing your chances of an approval with a greater SL when applying for your next card. Some lenders pay more attention than others, but to an extent higher limits seem to warrant a better chance of a higher limit approval from your next app. It's always very much YMMV, and every situation is unique however. 

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That's sort of what I meant on the CLI effect is, would a higher aggregate total for available credit or average available credit per account have a positive effect on score directly or indirectly?

I've been reading a lot of posts and I can say I've seen a pattern in the Approval forum of typically people with high amounts of total available credit, even if they have like 12+ credit cards, tend to get significantly higher starting limits on new cards.  I suppose this is due to a lender see that they have a decent score (over 700)  and a lot of available credit combined with an average age not being to low, it's an indicator the applicant has been able to "handle their credit" to that point.

I also ran across some posts in a recent search where people thought a CLI decreased their score and after further discussion, they realize the decrease wasn't due to the CLI, it was just a coincidence the CLI happened about the same time something else changed in their credit file that they didn't realize could lower their score.

I think the bottom line is the better question for my purpose is, as long as it is a Soft Pull, would a recently reported CLI never hurt your score and approval odds when applying for an additional card?

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A CLI will not negatively affect your score at all. 

It could have an effect on approval odds and not always in the way you want i.e. being denied because you are at the max with that lender 

[Anonymous]

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@Jazee wrote:

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That's sort of what I meant on the CLI effect is, would a higher aggregate total for available credit or average available credit per account have a positive effect on score directly or indirectly?

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Neither.  Credit limits do not impact Fico scores as others have stated above.  If higher limits in turn lower utilization across threshold points, it's possible to see score increases from that... but it's not from the credit limits being greater.

[Ficoproblems247]

"That's sort of what I meant on the CLI effect is, would a higher aggregate total for available credit or average available credit per account have a positive effect on score directly or indirectly?"

No. Again, amount of available credit has NO effect on your FICO score, neither directly nor indirectly. What I mentioned before circles back to what you were talking about as well. Those members you see with a long list of cards with high limits generally get better SLs from new lenders due to their thick/aged accounts. They have proven over time that they can responsibly manage high limits. Sometimes when other banks see this then they will issue a limit in line with other cards as they see fit. Sometimes it doesn't work like that. Bottom line: Amouny of available credit has 0 effect on your FICO scores. 

[SouthJamaica]

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@Jazee wrote:

Does a Credit Limit Increase always improve your credit score or are there circumstances it can lower it?

More specifically, I have 3 credit cards (one is 15 years old, one is 6 months old, and the other is 3 months old) for a total of $14,500 in available credit.  I have an Auto Loan and no other credit accounts.  My utilization on each card is no greater than 7% and my total utilization on all cards combined is 4%.  My Debt to Income ratio is 7% excluding rent payment, 28% including rent payment.  

I want to get one more card that has travel-related points/cashback/benefits and was planning on applying for it in about 3 months.  I know the card I am applying for will do a hard pull from Trans Union.  My 6-month old card is an Amazon Store Card and I requested and got a CLI after 3 statements.  

My question is, would I have a good chance of improving my TU score by requesting a second CLI from Synchrony (which is a soft pull) and waiting for the higher limit to report, before applying for my second card from NFCU?

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No, an increase in credit limit is probably not going to increase your scores.

[Mr_Mojo_Risin]

You wouldn't see an increase in score with FICO just because you received a CLI unless you cross a utilization threshold.

It's possible to see an increase with Vantage Score just for receiving a CLI. But we know very few lenders use thar score.