The reason a credit limit increase can help credit scores is that it can lower your utilization rate, or total debt balance. Your utilization rate shows how much of your available revolving credit you are using and is the second most important factor in credit scores with an impact of 30%, second only to your payment history 35%. The lower your utilization rate, the less risk you represent to lenders as well. It is recommend keeping your utilization rate below 10%

How Can I Calculate My Utilization Rate?
The utilization rate on your credit card is calculated by taking the card balance and dividing it by the credit card limit on the account. If you have more than one credit card, you can calculate your overall utilization rate by adding up all of your credit card balances and dividing that number by the total of all your credit limits. For example, if you have two credit cards, each with a $5,000 limit, you have a total of $10,000 available. If one card has a $5,000 balance and the other a zero balance, your overall utilization rate is 50%. However, if the limit on one card is increased by $5,000, your limit total increases to $15,000. Your overall utilization rate immediately decreases to 33%.

You can ask your lender to reduce the limit or lower it to its previous level, but that likely won’t help your credit scores, and it could hurt them. Similarly, closing a credit card account can negatively impact your scores, even if you are no longer using it. If it’s you or the financial institution that’s closing the card, it eliminates the available credit limit on that account, which in turn can increase your overall utilization rate. How Do I See What’s Impacting My Scores?
If you want to learn more about how the different elements in your credit history are affecting your score, you can start by subscribing to a credit monitoring service. When you get the score, it will include a list of the top risk factors that are currently impacting you the most. By focusing on improving those factors, you can begin to increase your credit scores.

In the meantime, some steps anyone can take to begin improving their scores include:

Bringing any past due accounts current: If you have any accounts that are currently past due, bringing them current and making sure all payments are made on time going forward is key to strengthening your scores.
Paying down credit card balances: Increasing your credit limit isn’t the only way to improve your utilization rate. If you are carrying balances on your credit cards month to month, paying them down or off will lower your balance-to-limit ratio and also save you money on interest fees in the long run.
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