how credit limits affect your credit score
your credit limits can have an impact on your credit score an important number that lenders use to decide whether to issue you new credit and what interest rate to charge you for it that s because your credit utilization ratio or the amount of debt you have outstanding at any given time as a percentage of the total credit you have access to is one of the factors that goes into computing your score the lower that percentage the better so it pays to be aware of your credit limits and try to keep your borrowing well beneath them generally speaking lenders look unfavorably on a credit utilization ratio that exceeds 30 3can lenders change your credit limit in most cases lenders reserve the right to change credit limits either raising or lowering them if you pay your bills on time every month and do not max out a credit card or line of credit the lender may increase your credit limit 4an increased credit limit has a number of benefits including potentially increasing your credit score by lowering your credit utilization ratio it also gives you access to more credit if you should need it such as in an unexpected emergency on the other hand if you fail to make regular timely payments or if there are other signs of risk the lender may opt to reduce your credit limit a reduction of your credit limit will raise your credit utilization ratio and potentially damage your credit score if a lender decides to lower your credit limit it is generally required to notify you 4