Credit Myth: It’s Best To Turn Down a Credit Limit Increase

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Credit Myth: It’s Best To Turn Down a Credit Limit Increase

credit limit

With all of our help here at Refresh Financial, you’ve gone ahead and started on the path to better credit. You’ve gotten yourself a credit card and you’re paying your bills diligently. You’re paying off debts and you’re starting to notice more and more credit options opening up to you. Then, one day, you get a letter in the mail saying your credit card provider has decided you’re eligible for a credit limit increase.

What Should You Do?

You’ve probably heard a lot of conflicting opinions about this. You may have heard some people say that accepting a credit limit increase is risky, and could land you in more debt than you can handle. You may have heard others say that having too much credit is a bad thing. You might have also heard the exact opposite. So which is it? Which is correct?

Well, that entirely depends on what sort of person you are with money. If you’re the type who is easily tempted by access to large amounts of spending power, and might likely blow it all before you even have time to think about it, the very clear answer is: decline the credit limit increase.

Make a Credit Limit Increase Work For You

However, if you’re a disciplined person (and anyone can be), bound and determined to turn your credit around and make your money work for you, a credit limit increase can actually be a really good thing.

Yes, I said good.

You see, when you put all of the credit you have to your name together, and then add up how much of it you’ve used, you have a usage percentage. The lower your usage percentage, the better it looks on your credit report.

So, Let's Paint a Picture

Imagine the only credit you have is a $5000 limit credit card and you’ve got a balance of $3000 on it. You’ve used 60% of your credit. Now, let’s say your credit card company offers to up that limit to $10,000. You’ve still got a balance of $3000 on it, but now your usage is at 30%. So long as you keep your usage low, this is going to look much better on your credit report.

The key is not using the new credit you’ve been given. If you can trust yourself to do this, accepting a credit increase is great for your credit. Contrary to what you may have been told, it can increase your credit score!


At Refresh Financial we offer a credit building program to help you increase your credit score! Learn more about the program!


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