diff --git a/erpnext/selling/doctype/sales_order/sales_order.py b/erpnext/selling/doctype/sales_order/sales_order.py
index dce625518c9446bab038570ac84296125aa006de..3648d6edd7d87cc5e27b380ff69dd2973f0d2fbd 100755
--- a/erpnext/selling/doctype/sales_order/sales_order.py
+++ b/erpnext/selling/doctype/sales_order/sales_order.py
@@ -518,6 +518,10 @@ class SalesOrder(SellingController):
 	def update_status(self, status):
 		self.check_modified_date()
 		self.set_status(update=True, status=status)
+		# Upon Sales Order Re-open, check for credit limit.
+		# Limit should be checked after the 'Hold/Closed' status is reset.
+		if status == "Draft" and self.docstatus == 1:
+			self.check_credit_limit()
 		self.update_reserved_qty()
 		self.notify_update()
 		clear_doctype_notifications(self)
diff --git a/erpnext/selling/doctype/sales_order/test_sales_order.py b/erpnext/selling/doctype/sales_order/test_sales_order.py
index 16e4a15a021a5523416d4bf256cea18303571a96..28afa8cb713dc3b0664cc465a7e503e64324284f 100644
--- a/erpnext/selling/doctype/sales_order/test_sales_order.py
+++ b/erpnext/selling/doctype/sales_order/test_sales_order.py
@@ -9,7 +9,8 @@ from frappe.core.doctype.user_permission.test_user_permission import create_user
 from frappe.tests.utils import FrappeTestCase, change_settings
 from frappe.utils import add_days, flt, getdate, nowdate, today
 
-from erpnext.controllers.accounts_controller import update_child_qty_rate
+from erpnext.accounts.test.accounts_mixin import AccountsTestMixin
+from erpnext.controllers.accounts_controller import InvalidQtyError, update_child_qty_rate
 from erpnext.maintenance.doctype.maintenance_schedule.test_maintenance_schedule import (
 	make_maintenance_schedule,
 )
@@ -31,7 +32,7 @@ from erpnext.stock.doctype.item.test_item import make_item
 from erpnext.stock.doctype.stock_entry.stock_entry_utils import make_stock_entry
 
 
-class TestSalesOrder(FrappeTestCase):
+class TestSalesOrder(AccountsTestMixin, FrappeTestCase):
 	@classmethod
 	def setUpClass(cls):
 		super().setUpClass()
@@ -52,6 +53,9 @@ class TestSalesOrder(FrappeTestCase):
 
 		super().tearDownClass()
 
+	def setUp(self):
+		self.create_customer("_Test Customer Credit")
+
 	def tearDown(self):
 		frappe.set_user("Administrator")
 
@@ -2124,6 +2128,28 @@ class TestSalesOrder(FrappeTestCase):
 		frappe.db.set_single_value("Stock Settings", "update_existing_price_list_rate", 0)
 		frappe.db.set_single_value("Stock Settings", "auto_insert_price_list_rate_if_missing", 0)
 
+	def test_credit_limit_on_so_reopning(self):
+		# set credit limit
+		company = "_Test Company"
+		customer = frappe.get_doc("Customer", self.customer)
+		customer.credit_limits = []
+		customer.append(
+			"credit_limits", {"company": company, "credit_limit": 1000, "bypass_credit_limit_check": False}
+		)
+		customer.save()
+
+		so1 = make_sales_order(qty=9, rate=100, do_not_submit=True)
+		so1.customer = self.customer
+		so1.save().submit()
+
+		so1.update_status("Closed")
+
+		so2 = make_sales_order(qty=9, rate=100, do_not_submit=True)
+		so2.customer = self.customer
+		so2.save().submit()
+
+		self.assertRaises(frappe.ValidationError, so1.update_status, "Draft")
+
 
 def automatically_fetch_payment_terms(enable=1):
 	accounts_settings = frappe.get_doc("Accounts Settings")