Credit Card Limit Increase vs. Opening a New Account
January 19, 2021
If you’re looking to improve your credit history and boost your credit scores, you might be mulling over whether to seek a credit card limit increase or open a new line of credit. Both options would increase your total available credit and lower your utilization rate.
It’s generally recommended that you have two or three major credit card accounts, in addition to other types of financing such as student loans, an auto loan or a mortgage. This is because lenders like to see a wide variety of credit types on your credit reports. It suggests to them that you’re able to balance multiple commitments at one time. However, you should be careful with the number of credit cards you open. Once you go beyond two or three cards, keeping track of monthly payments could get confusing, especially if the accounts have different due dates.
Although a limit increase is preferable for people who already have a few credit cards, opening a new account might be a good idea if you have only one card. In fact, your credit scores will be enhanced by getting a second line of credit, despite the initial decrease that results from a hard credit inquiry.
Equifax has a discussion of the pros and cons of each strategy in their article "Is It Better to Seek a Credit Card Limit Increase or Open a New Account?"