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By Real Simple
Updated November 15, 2007
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Wallet with credit cards
Credit: James Baigrie

Q. The bank increased my credit limit automatically. Is there any reason I should say no? Is it bad to ask the bank to increase my credit limit?

A. It’s usually not a bad idea to accept (or ask for) an increase. When you’re applying for new credit, lending institutions like you to have low credit usage―the total amount you’ve charged to your cards compared with your total available credit. Take a pass on an increase, though, if you need to reduce your credit limits, says Scott Bilker of DebtSmart.com: “For example, you’re applying for a mortgage and the bank says you have too much available credit.” Banks want to feel sure that you’ll be able to repay a loan. Too much available credit might be an invitation to max out your cards.