How To Increase Your Credit Limit

Introduction

Most people’s financial needs evolve over time, and what worked at one point might not be the right fit later.

A credit limit is one example of this — if you’ve had a card for a while, you might want to know how to increase your credit limit.

Also known as a credit line, your credit limit is the amount you can spend on your card before you need to pay off some of the balance. An increased credit limit can offer financial flexibility and could even help raise your credit score.

What Is a Credit Limit Increase?

When you originally applied for your credit card, the bank determined your credit line based on your financial history and creditworthiness at that time. As you make payments on time, maintain a healthy credit utilization ratio (ratio of credit used to credit available), and perhaps, increase your income level, you may become eligible for a credit limit increase.

Issuers will generally offer you a credit line increase periodically without you having to ask for it. In these circumstances, they will likely only use a soft inquiry, which won’t impact your credit. Just check with your card issuer so you understand how your score will be affected.

Getting a credit limit increase can help boost your credit score by lowering your credit utilization ratio. You’ll have more credit so you can borrow more while staying within a healthy ratio. It also adds to your flexibility when it comes to day-to-day spending.

How To Increase Your Credit Limit

Depending on your card issuer, you will have a few options for requesting an increase to your credit limit.

Be prepared to update personal information like employment status, income and housing expenses. You may also be asked for the reason behind your credit limit increase request.

Make an online request

One of the quickest ways to ask for a credit line increase is through your card issuer’s app or website. Log in to your account, look for an option like “credit limit increase” and follow the steps provided. Have your updated personal information ready to enter if needed.

Call customer service

Most credit card issuers list a customer service number on the back of your card, which you can call to request a credit line increase. Be ready with your up-to-date personal information and the reason you’re asking to increase your credit limit.

Apply for a new credit card

If your credit history and other factors allow it, applying for a new credit card is an option to consider. Even if the new card doesn’t come with a higher credit limit than your current card, it will have the same effect as a credit line increase by raising your total available credit. Just be mindful that applying for too many cards at once can result in multiple hard inquiries, which may lower your credit score.

Eligibility Criteria for Increasing Your Credit Card Limit

Credit card issuers will look at certain criteria when considering your eligibility for a credit limit increase.

These mainly include signs of responsible account behavior, like making on-time payments, making more than the minimum monthly payment, and paying off your balance in full.

Other common factors your card issuer may consider before increasing your credit limit include changes to your income, your credit utilization ratio, and whether you’ve ever maxed out your card.

Finally, lenders may have rules about credit limit increases, like requiring the card to have been open for a certain amount of time.

How Can You Improve Your Chances of Getting More Credit?

Card issuers look for the signs of good credit habits and your ability to pay off debts when considering an increase to your credit limit.

In addition to making your debt payments on time, you may also want to be sure you pay more than the minimum payment. Paying down outstanding debt balances entirely can also help.

Finally, keeping your financial and personal information up to date with your lender could help, especially if you’ve seen an increase in income since the last update. Remember to count all sources, including your spouse or partner’s income that you have reasonable access to, alimony, child support, investment income, retirement income and benefits you receive.

How Can a Credit Limit Increase Request Impact Your Credit Score?

Your credit utilization ratio is one of the major factors used in calculating your credit score. And since a credit limit increase means an increase in your total available credit, it may raise your credit score.

However, the type of inquiry your card issuer uses before approving your credit line increase may temporarily lower your credit score. Each card issuer is different — some use a soft pull which does not affect your credit score, while others use a hard pull, which can temporarily lower your credit score.

Is It Good or Bad to Increase Your Credit Limit?

Increasing your credit limit can have several benefits. Having more available credit could improve your credit score, which can lead to more favorable lending terms in the future.

An increased credit limit can also lead to more financial flexibility, whether in case of an emergency or another unexpected change in plans.

When you increase your credit limit, you have the potential to earn more credit card rewards each month, since you can charge more to the card.

However, there are other factors to consider when asking to increase your credit limit.

For starters, some card issuers use a hard inquiry, which can temporarily lower your credit score.

If overspending is a concern for you, a higher credit limit can lead to adding on more debt, which in turn can lead to interest charges or missed payments. These may impact your credit score negatively and offset the benefits of an increased credit limit.

What To Do if You Are Denied a Request for a Higher Credit Limit

If your credit card issuer denied your credit limit increase, you can ask for the reason why and use that information to increase the odds of approval in the future.

These steps may include:

• Paying your credit cards on time
• Making more than the minimum payments
• Paying down outstanding balances
• Lowering your credit utilization ratio
• Paying off any accounts in collections
• Checking for errors on your credit report

Sometimes, the lender may deny your request for reasons outside of your control — for instance, their own policies about the total amount of credit they extend to a customer on a single card. In this case, you may want to consider opening a new card.

Bottom Line

There are many reasons you may want to increase your credit limit, from general financial flexibility to a specific upcoming purchase.

And an increased credit limit comes with additional benefits, as long as you continue to use credit responsibly and make payments on time.

Now that you know how to increase your credit limit, you can decide whether it’s the right step to take for your financial goals. If you’re looking for a new credit card that gives you automatic reviews for possible credit line increases, see if you pre-qualify for one from Credit One Bank.