WalletHub, Financial Company
The reason why your credit limit went up is probably because you received an automatic credit limit increase from your credit card company. Creditors periodically review cardholders’ accounts and may consider increasing the credit limit as a reward for consistently paying the monthly bills on time and maintaining a low debt level.
Another reason your issuer might increase your limit is if you updated your account profile with a higher income. The first account review for a potential automatic credit limit increase typically happens after your account has been open for about six months.
What you should know about automatic credit limit increases:
- An automatic increase uses a soft pull of your credit, which does not hurt your credit score. A soft pull can occur at any time and without your knowledge.
- Some issuers may give you the option to deny an automatic credit limit increase or request an even higher limit.
- If you initiate a request for a credit limit increase, a hard pull may occur, depending on the issuer. Hard pulls can only be done with your permission, and may cause a slight dip in your credit score.
An automatic credit limit increase could actually improve your credit score. A higher credit limit will lower your credit utilization. But that’s only if your spending doesn’t increase in proportion to the raised limit. The general rule is to maintain an overall utilization ratio of less than 30 percent. Lower utilization is better for your credit score.
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