If your income changes after you open a credit card, you may want to let your card issuer know. By doing so, you could increase your card’s limit without having to worry about a credit limit increase request, or dealing with the hard inquiry that some issuers may initiate.

But can telling issuers about your new income ever be a bad idea?

-- Why Issuers Want Your Income –

When applying for a new credit card, issuers will almost always request your current income. This might be broken down by the amount you bring in monthly or annually. They may also request info on specific monthly expenses, such as your home mortgage, auto or student loan payments, and other credit card minimum payments due.

These numbers will help credit card issuers determine your monthly cash flow. This cash flow number gives issuers a much more accurate picture of what you can actually afford to pay on a new credit card each month.

After all, it doesn’t matter whether you bring in $1,000 or $10,000 a month – if you’re overextended in debt, you have less available cash to cover a new credit card payment. This makes you a bigger risk to card issuers who will, in turn, give you a lower card limit.

-- Why You Should Update Your Income –

Odds are that, at some point after you open a new credit card, your income will change. It may adjust for better or worse, but either way, you might want to let your card issuers know.

If your paycheck has gone up since opening your card, updating your annual income can result in a raised credit limit. This is helpful, especially considering that some card issuers will initiate a hard inquiry prior to approving your credit limit increase.

No, a few inquiries a year won’t drop your credit score much. However, if you have too many inquiries, it can indicate to other lenders that you could potentially be having some financial issues. Not to mention, each inquiry has the ability to lower your credit score a few points.

With many credit issuers, updating your income can automatically trigger a credit limit increase. This increase isn’t guaranteed, but if you manage to snag one, it’ll save you a hard pull.

-- Downsides to Updating Your Income –

If your job has changed or you’ve retired, and your paycheck has dropped, you could actually see a negative impact from updating your income with a card issuer.

This might come in the form of a card issuer unexpectedly decreasing your credit limit. If an issuer decreases your credit limit and you carry debt on other revolving account, your credit utilization will increase. And with each credit utilization increase, you’ll see your credit score drop.

This doesn’t necessarily mean that you should avoid telling your issuers if your income has changed. Just be aware that if you’re walking around with balances on other accounts, you could see a negative impact on your credit score.

Earning more money is almost always a positive thing. Letting a card issuer know that your income has increased can often result in a credit limit increase, too. This will not only give you more spending power but also improve your credit utilization… and save you a hard inquiry on your credit report in the process!