A credit limit increase can result in either a soft or hard credit pull, depending on the creditor’s policies and procedures. In general, requesting a credit limit increase is considered a form of applying for new credit, which typically triggers a hard credit inquiry.
A hard credit pull is a more comprehensive review of your credit history and is recorded on your credit report. It can potentially have a negative impact on your credit score, albeit usually a minor one. Lenders typically perform hard inquiries when they need to make a lending decision, such as approving a new credit card application or increasing an existing credit limit.
On the other hand, a soft credit pull is a less detailed review of your credit history and does not impact your credit score. Soft inquiries are commonly used for background checks or pre-approval offers. They may also occur when you check your own credit report or when a creditor performs a periodic account review. Soft inquiries are not visible to other creditors and do not affect your creditworthiness.
When it comes to credit limit increases, some creditors may only perform a soft credit inquiry, especially if you have a good payment history with them. They may base their decision on your account usage, payment history, and overall creditworthiness without needing a full credit review. This is more common with credit card issuers who have access to your spending patterns and payment history.
However, other creditors may require a hard credit inquiry to assess your creditworthiness and determine whether granting a credit limit increase is appropriate. This is especially true for larger increases or if you have a limited credit history with the creditor. They want to ensure that you have the financial capability to handle a higher credit limit without increasing their risk.
It’s important to note that regardless of whether a soft or hard credit pull is performed, the impact on your credit score is usually minimal and temporary. If you have a strong credit history and manage your finances responsibly, the effect of a credit limit increase inquiry should not be a cause for concern.
In my personal experience, I have applied for credit limit increases with various creditors over the years. In some cases, I received an immediate approval without any credit inquiry, indicating that a soft inquiry was likely conducted. However, there have been instances where a hard inquiry was performed, particularly when requesting larger credit limit increases or when dealing with certain financial institutions.
To summarize, while it is possible for a credit limit increase to result in a soft credit pull, there is a good chance that a hard credit inquiry will be incurred. The specific creditor’s policies and your credit history will play a significant role in determining the type of inquiry that will be conducted.