I got an 80% increase. Nice little surprise. My wife was laid off due to the pandemic in the spring. We we’re lucky to avoid any major issues, but we did unfortunately end up carrying a couple of big charges and took a hit on a late payment on another card that, together, dropped my score 123 points (first missed payment ever). Fortunately we’re nearly caught up on balances and my score has already rebounded over 100 points. I guess it was enough for G Sachs to extend the increase. I’m so grateful as it will only help speed up the rebound.
You are correct. Seeking NEW sources of credit when it is unclear why you need it might throw some flags, particularly on revolving accounts like credit cards. Seeking multiple sources of NEW credit within a short period of time will almost always be a red flag and there is a reason the hard inquiries creditors pull have a negative impact on your score and usually stick around for a year or two.
The key words here are SEEKING and NEW. Your bank giving you an increase on an existing account based on a soft pull is not considered a new source of credit. There is no situation where an automatic credit increase like this should harm you.
If you are actively seeking new credit or asking for increases that require a hard pull of your credit, that is where you are going to run into trouble.
If you open 3 new credit cards, take a new personal loan and finance a car all within a year then try to buy a house, yes there will be concerns that you are able to afford all the payments.
Even if that is not the case, loan underwriters, particularly for home mortgages, are paid to be thorough and ask questions that can seem uncomfortable, but it doesn’t mean what they are asking about is necessarily a bad thing. People get asked to write letters/statements about the purpose of certain accounts or clarifying sources of income all the time.
Yep. An automatic credit increase, especially where your income stays the same, can effect your ability to get new credit in the future. Even if it's unused; a lot of existing credit can be a red flag to lenders. Period.
You are incorrect though saying an increase on an existing line shouldn't hurt you. That is 100% incorrect; it's probably won't hurt you(otherwise they probably wouldn't have given it to you say in cases of people who carry high balances all the time) but it can causes issues in the future. In and of itself, the increase will not hurt your score. I never said it would; a few people just lacked reading comprehension. I never said the increase could hurt you. I said it could lead to negative consequences in the future with future lenders just like you have laid out.
What if I was getting ready to go to the bank the next day to ask for a loan and Apple just tossed me more credit I didn't ask for? I might have been approved before, I might not after. Hence why it should be standard practice to ask your clients if they want an increase. Nobody does but they should. And yes, before you google champions freak out I know an increase wouldn't show up on your credit report that quickly; I'm just making a point.
Any lender worth their salt is going to ask themselves "If they max out all their lines, will they be able to pay us?" Notice I said if. Yes an 822(lol) credit score tells the lender you haven't and probably won't, but it's still a possibility. Read this again if you are confused about what I'm saying. I guarantee you that a reputable lender asks themselves that question.
Your credit score is NOT a license to borrow money.
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