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Increased credit limit

My credit card company has written out of the blue telling me they are going to increase the amount I can borrow. Currently I have an interest free amount sitting on the card which I am gradually chipping away at and don't use the card otherwise. Will my credit rating be affected if I accept (by default) or decline the increase?


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It will not affect your credit rating, as such, either way, but an increased limit would count against your available credit elsewhere. Any subsequent decision would take account of the possibility that you might maximise all your existing credit facilities. There is a difference between your credit rating and how much additional credit that you can get offered. If you might need other credit, such as extra mortgage, then you should minimise your existing credit facilities. Especially, you should formally close any unused card accounts (simply stopping using them is not sufficient). Mike

It’s unlikely that your credit rating will be significantly affected by this. Your credit report certainly won’t show that you declined a credit limit increase, so that won’t be an issue. If your card balance is quite close to your existing limit then a credit limit increase may have helped by lowering your credit utilisation on that account, which is something lenders often look at. But unless you have high balance-to-limit ratios on several lines of credit then, again, this is not very likely to have any material effect on credit scoring. Credit scoring assesses a multitude of different variables. If the overall picture that your data paints is of a responsible borrower then you should have no cause for concern.

This wasn't strictly the issue, but if you ask to reduce the credit limit yourself, because it's bigger than you want or need, it may damage your credit rating because the reports from the credit agencies show only that the limit was reduced, not whether the limit was reduced by the lender or by yourself.