Editor's choice: Experian Credit Report
- Free FICO Score
- Credit alerts and monitoring
- Report & score updated every 30 days
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
There are a lot of factors that go into calculating a credit score, so it’s no surprise that there are a handful of confused consumers who have questions about what makes their score bob up and down. A common question that leaves most people scratching their head is: Will my credit score improve if I request a lower credit card limit?
It’s pretty cut and dry, but let’s go through all the situations why it’s not in the best interest of your credit report to reduce your credit limit — and the one scenario where it actually might make sense.
Most of the times, the answer is no. This is because your credit utilization ratio accounts for about 30% of your credit score. By asking for a lower credit card limit, you’re directly increasing your credit utilization ratio which will negatively impact your score.
Besides that, having a good amount of credit available at your disposal can help out financially when unexpected expenses pop up out of the blue.
Another reason you wouldn’t want to decrease your credit card limit is because a line of credit reduction has no positive impact on your credit score.
Despite what was previously just stated, when high credit limits are too tempting and you can’t control your impulse to spend, you’re better off asking for a decrease in your credit limit — or just cut up the card — in order to eliminate any spending outside of your means.
You may see an initial negative impact on your credit score, however, you’ll be minimizing any chances of spiraling into a heap of debt and causing serious damage to your credit score later.
If you’re considering lowering your credit limit, it’s also important to factor in whether you have any planned purchases coming up. You’ll want to make sure it doesn’t completely limit your spending power, especially if you rely on that card for emergencies.
Keep in mind that it doesn’t matter if you or your bank reduced your credit limit, either way it’ll generally result in a drop in your credit score because of the increase in your credit utilization ratio.
If you’ve maxed out your credit card in the past or find it hard to stick to a budget, you can curb the temptation to spend by reducing your credit limit as you pay off your credit card. Here’s how:
Unless you don’t trust yourself and you’re only decreasing you credit card limit as a preventive move to steer clear of potential debt, you should leave your line of credit right where it is.
To improve your credit score, focus on positive credit building habits like paying the balance in full and on time each month, keeping your credit utilization ratio low and leaving your accounts open to grow the length of your credit history.
Pass on store cards if you’re looking for lasting value.
State law may benefit you when you’re in debt.
Get your loan payments covered when you experience a disability and can’t work, but with limited coverage.
Developing a long-term relationship with your local banker can be a great investment for your business.
If you need to remove a tree from your property, consider paying with plastic.
Have a credit score around 550? Struggling to qualify for an unsecured credit card? The new Petal 1 “No Annual Fee” Visa Credit Card might be for you.
In the age of #adulting, Finder asks Americans what their financial priorities are and what they’re most willing to dip into their savings for.
Earn more rewards on select categories or get an extension of some travel perks.
Make a plan for how to tackle your debt — even if it’s already gone to collections.
Have you been ‘friend-zoned’ by every credit card you long for? Read what the experts have to say about pivoting towards success after your credit card application has been rejected.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.