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Should you accept a credit limit upgrade? Calculate how increasing your limit lowers your credit utilization ratio and improves your credit score.
How much do you typically spend on your card each month?
The higher limit being offered by the bank.
Credit Utilization Ratio (CUR) Drop
By keeping your spending the same but unlocking a higher limit, you drastically reduce your utilization ratio.
Old State
Current Utilization
High
New State
New Utilization
Healthy! Good for CIBIL
Because this increase drops your utilization from above 30% to below 30%, you can expect a positive impact on your credit score over the next few billing cycles.
Yes, almost always. As long as you have the discipline not to increase your spending just because you have a higher limit, it's highly beneficial.