Learn more about Credit Limit Change Notification

While your account is assigned a credit limit when you open it, the creditor can choose to increase or decrease in the future.

The creditor can lower your credit limit based on the following factors:

• Your credit score drops
• You miss payments
• You take on more debt (including debts from other creditors)
• You infrequently use the account
• Your buying behavior changes

The creditor can also increase your credit limit based on the following factors:

• You request a credit limit increase
• Your credit score improves
• Your income increases (and you report the increase)
• You have a good history of paying your bills on time

In the long term, a credit limit increase may improve your credit scores, provided your spending patterns remain the same and your credit utilization ratio lowers.

If one of your lenders or creditors were to decrease your credit limit, and your spending patterns remain the same, it could lead to a higher debt-to-credit ratio and subsequently a higher credit utilization ratio, which could negatively impact your credit score.

There is currently no definitive way to know if your lender plans to lower your credit limit. In fact, consumers often don't know their credit limit has changed until they get an alert from their lender or creditor. This is why it's especially important to be aware of the possibility that your credit limit may decrease and know what those changes may mean for your credit scores.

There are two ways to get a credit limit increase:

1. Asking for a credit limit increase on an existing credit card – usually one you’ve had for at least a few months. When you make this request, the credit card company may review one or more of your credit reports as part of their evaluation. Whether this is a “soft inquiry,” which does not impact credit scores, or a “hard inquiry,” which may impact credit scores, varies based on the creditor's policies.
2. You may get a credit limit increase if a credit card company increases your limit without a request from you. This typically occurs after you’ve demonstrated responsible credit habits such as making on-time payments and paying more than the minimum payment required.

Whether a credit limit increase stems from your request or the creditor's decision, it’s important to evaluate your own personal situation and continue to use discretion in maintaining responsible credit behavior.

Credit Utilization is a score commonly recommended to keep your total credit utilization rate below 30%. For example, if your total credit limit is $10,000, your total revolving balance shouldn't exceed $3,000. Generally, a low credit utilization ratio is considered an indicator that you're doing a good job of managing your credit responsibilities because you're far from overspending. A higher rate, however, could be a flag to potential lenders or creditors that you're having trouble managing your finances.