Will Lowering Your Credit Card Limit Hurt Your Credit Score?

Your credit card spending limit should be just right—high enough to cover your expenses while still being within your means of repayment. In some cases, choosing a lower credit limit may actually help you maintain financial discipline, even though many people strive for a higher limit. However, does your credit score change if you ask for a lower limit?

There is no need to mention that your credit card spending limits should align with your financial needs, together with your spending patterns. Your repayment capability must match the credit limit provided to you. Credit card companies usually provide higher credit limits to those who consistently make their payments on time.

People who frequently spend beyond their credit card limits should evaluate whether to maintain their current credit limit or request a lower amount to control their spending.

Seeking a lower credit card limit from your bank may not impact your credit score directly. Your credit score, however, could experience indirect changes based on the method of handling credit utilisation ratios.

A credit utilisation ratio shows the proportion of your credit usage compared to your total accessible credit limit. When you keep your current credit usage amount the same but your credit limit decreases, your credit utilisation ratio will increase which negatively affects your credit score.

The amount of credit you use compared to your available credit determines your credit utilisation ratio. Your credit score will increase when you maintain minimal credit usage against a higher credit limit because this lowers your credit utilisation ratio.

A good credit score enables people to get loans and credit cards quickly while receiving lower interest rates and more power to negotiate and higher loan limits.

One’s credit score depends on various factors, including credit utilisation amounts, payment history and as well as the duration of credit history.

Your credit score will not significantly change because of a single credit limit reduction, but it remains beneficial to practice responsible credit management alongside low credit utilisation ratios. The higher credit limit on your credit card does not mean that you exhaust it entirely. The ideal credit utilisation ratio should stay below 30 per cent, according to financial recommendations.

When you surpass your credit limit, you need to pay your credit card bill in full and on time to avoid additional financial burdens. When your credit limit increases, it reduces the likelihood of reaching your credit utilisation limit.

After evaluating the advantages and disadvantages, you should ask your bank for a credit limit reduction if you think a larger limit results in spending beyond your means.