Why asking for lower card limits can hurt your credit scores

As a credit cardholder, have you ever thought of requesting lower credit limits? It may seem like a smart idea to avoid overspending or to appear more financially responsible, but experts warn that doing so could hurt your credit scores.

According to a recent article, asking for lower card limits can negatively impact your credit utilization ratio. This ratio measures the amount of credit you’re using versus the amount you have available. A lower credit limit would decrease the available credit you have, which means your credit utilization ratio would increase if you continue to use the same amount of credit. This can potentially lower your credit scores.

Lower limits can also affect other factors that determine your creditworthiness, such as credit age and credit mix. Your credit age can be reduced if you close an old account with a high limit. Your credit mix, or the variety of credit types you have, can also be impacted if you reduce the number of credit cards you hold.

Overall, while it seems like a good idea to lower your credit limits to manage your spending, it’s essential to be mindful of how it could potentially affect your credit scores. It’s better to maintain a low credit utilization ratio by paying off your balances regularly and keeping your credit limits high.

Credit scores are crucial in determining our financial eligibility for loans, credit cards, and even apartment rentals. Therefore, it is important to be knowledgeable and responsible when managing our credit to make a positive impact on our financial futures.