How to Increase Your Credit Limit

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Raising the limit on your credit card or line of credit can be useful for a few different reasons. Maybe you’re looking for additional funds to cover unforeseen expenses or to finance a small business . Or, you might just want to improve your credit score or transfer a balance from another account. Whatever the reason, it’s important to know how to request an increase, what to expect after you do and how it can impact your credit score. Read on to learn more about increasing your credit limit.

What Is a Good Credit Limit?

A good first step before figuring out how to increase your credit limit or how to request a credit line increase is to ask yourself the following questions:

  • When should I ask for a credit limit increase?
  • What will I need to get an increase?
  • Why do credit cards increase your limit?
  • How long does it take for a credit limit increase?
  • How much of an increase should I request?

The first four questions are answered further down. The answer to the last question — How much of an increase should I request? — depends on why you want a higher credit limit to begin with. If your goal is to improve your credit score by having more available credit, you might want to ask for a small increase. If your current credit limit is $2,000, for example, maybe you’ll ask for an extra $500. This way you can improve your credit score without raising your limit higher than you want, which could open you up to more debt if you aren't on top of your spending. If you need to pay for a big expense, on the other hand, you might ask for twice the current limit or the highest credit limit available. Just be aware that the higher the request, the harder it is to get approved. From a financial standpoint, a “good credit limit” is one that aligns with your spending habits and overall financial situation. Don’t ask for a big increase if you’re afraid you’ll take on more debt than you can afford. Sometimes a lower limit is the best defense against overextending yourself.

How Does a Credit Limit Increase Affect My Credit Score?

The main advantage of increasing your credit limit — beyond having access to more money — is that it can actually improve your credit score . That’s mostly because it reduces your credit utilization ratio, which measures the ratio of revolving credit you’re using compared with the total amount of revolving credit you have available. Put more simply, it’s your credit balance divided by your credit limit. For example, if your balance on a credit card is $500 and your credit limit is $2,000, then your credit utilization for that credit card is 25 percent. If your credit limit is raised to $3,000 and your balance remains at $500, then your credit utilization ratio drops to 16.7 percent. This can cause your credit score to increase by several points — but you still need to practice other good credit habits to sustain a good credit score. Related: Will Banks Give Me a Second Credit Card If I Already Have One?

Low Utilization = Better FICO Score

According to the credit bureau Experian, you should keep your total credit utilization ratio on the low side — ideally, below 30 percent — to maintain a good FICO score . The amount of credit you owe compared to the amount you have available makes up about 30 percent of your overall FICO score. A low credit utilization shows that you’re doing a good job managing your credit and are not overextending yourself financially — something that tells banks you’re at low risk of defaulting. Raising your credit limit without raising your balance can help improve your credit utilization ratio, which is a positive.

Hard Inquiry Impact

The ideal way to get a higher credit limit is to have the issuer do it automatically. If that doesn’t happen, you can contact the issuer yourself and request a higher limit. There’s a potential downside to doing this, however: Your request might generate a hard inquiry from the issuer, which usually causes your credit score to drop. A hard inquiry, also known as a hard pull, typically happens when a bank or credit card issuer checks your credit history after you’ve approached them about a loan or higher credit limit. People usually face a hard inquiry when they apply for a new credit card, for example. Although a hard inquiry can ding your credit score, it’s usually not by much — and it might even be offset by the improvement you get from a lower credit utilization ratio. Hard inquiries typically fall off your credit report after two years, making it easier to get credit in the future. Learn: How Many Credit Cards Should I Have?

How to Increase Your Credit Limit

If you’re looking to get a credit limit increase, you have a few different options. The one you ultimately choose will be influenced by different factors, including your credit history, the amount of the increase and when you need it. Here are different ways you can get a higher credit limit:

1. Wait for an Automatic Increase

If you don’t need the credit limit increase right away, your card issuer might raise it automatically after you’ve built up a good payment record over a long enough period of time. It might take a while, though. Experian notes that most major card issuers won’t automatically raise your limit until you have at least six to 12 months of making your payments on time and not exceeding your credit limit. To improve your chances of getting a higher credit limit automatically, you should do the following:

  • Build a good payment history. You can do this by never making late payments or creating situations where payments will be returned, such as for insufficient funds.
  • Use the card frequently. The more you use your card, the more money the bank or issuer earns off of swipe fees. If you don’t use the card often enough, the issuer probably won’t offer an automatic increase.
  • Maintain a good credit score. Many issuers will not only look at the way you use their specific cards but also how you handle other debt. If you fall behind on mortgage payments, business loans or other credit card bills, for example, your issuer is not likely to give you an automatic credit limit increase.
  • Update your income information. Occasionally, your credit card issuer might send you an email or notification via their app asking you to update your income information. If your income has increased, your credit card issuer might see this as a sign that you could use more credit and might choose to grant you a credit limit increase based on this information alone.

Read: How Does My Personal Credit Affect My Business?

2. Request a Credit Limit Increase

If you have a pressing need for a credit limit increase and don’t want to wait for it to happen automatically, then it’s time to be proactive by contacting the bank or issuer and making the request yourself. Before proceeding, think about why you want the increase. If your only goal is to improve your credit utilization ratio, then you might be better off opening a new card instead of requesting a limit increase for an existing one. Getting a new card not only brings more available credit — you might also get an introductory offer that offers a low interest rate, cash back or other perks. Just be aware that applying for a new card will likely bring about a hard inquiry. If you don’t want to wait for a new card to arrive or would rather stick with your current credit card issuer, then your next move is to request a credit limit increase. Here’s what you can expect:

  • Many issuers will ask you to provide financial information, such as your yearly income and monthly housing payment. This helps them evaluate your risk as a borrower.
  • Your issuer will then decide whether to agree to your specific increase request, offer a small increase or deny an increase.

Here's how to request a credit limit increase online and by phone:

How to Request a Credit Limit Increase Online

This is the simplest and most straightforward way to request a credit limit increase, and it can usually be done in a matter of minutes. You’ll need to set up an online account with the credit card issuer if you haven’t already done so. After that, follow these steps:

  • Log in to your online credit card account
  • Look for a link that says “Request Credit Limit Increase” or something similar. This link will appear in different places on different websites. If you don’t see it on the home page, check menu items such as “I want to…”
  • Fill in all of the requested information. This might include information related to your income and debt.

You might get immediate approval or denial if your request is for a small increase. But with larger increases, it could take a few days to process your request. In this case, the issuer will notify you via email or postal mail with its decision. Related: How to Improve Credit Card Approval Odds

How to Request a Credit Limit Increase by Phone

If your card issuer doesn’t offer an online option, or you’d rather speak with a live person about your credit limit increase, most banks and credit card issuers let you make the request over the phone. The number to call is usually listed on the back of your credit card. This process is more involved because you have to call during business hours, you’ll probably have to listen to a list of menu options to get to the right place and you might spend a couple of minutes (or more) on hold. Before calling, it’s important to know how to ask for a credit limit increase. The best method is to have the following information handy:

  • Identifying information such as your password, Social Security Number and address
  • Your employer name and job title
  • Your annual and/or monthly income (net and gross income)
  • Your monthly housing payment
  • The credit limit increase you want to request
  • Why you might qualify for a higher credit limit

Be prepared to explain how long you’ve been a customer, what your payment record has been and how often you use the card. If you’re recently received more income through a pay raise, a job change or some other means, you might want to mention this as well. As with online requests, you might get an immediate approval or denial over the phone if the requested increase isn’t that much. Otherwise, you’ll probably have to wait for an email or letter.

How Rules Vary Between Different Banks and Issuers

The process of requesting and receiving a credit limit increase isn’t the same at every bank or credit card issuer. Here are a few different rules you might run into, depending on who you bank with:

  • A waiting period of 30, 60 or 90 days after opening an account before a limit increase can be requested.
  • A waiting period of six months or more before making subsequent credit limit increase requests.
  • Some banks or issuers will automatically increase your credit limit after you’ve made a certain number of on-time payments for a certain length of time, such as five months. Other banks have a set waiting period, such as a year, before you’re eligible for an increase. Check with your bank to see which applies.
  • Certain banks employ a hard inquiry every time a credit limit request is made, regardless of whether it’s online or over the phone. Some are more likely to employ hard inquiries with phone requests than online requests.
  • You can request soft inquiries at some banks, though they might refuse. If they say no, hang up and call another time.

Learn: How the Fed Interest Rate Cut Affects You

Why You Might Be Declined for a Credit Limit Increase

If your request for a higher credit limit is turned down and the bank can’t or won’t tell you why, it’s time to think about possible reasons why you were denied and what you can do to correct them. If you’ve been turned because you made the request too soon after getting the credit card or line of credit, there’s nothing you can do except wait until enough time has passed. If you have a poor credit score then you should spend the next year or more cleaning up your credit history. You can do this by making payments on time, reducing your credit utilization ratio, keeping accounts open to lengthen your credit history and monitoring credit reports to see if anything negative needs to be fixed or disputed. Here are some other reasons you might have been turned down for a credit card limit increase or credit line increase:

  • Insufficient income. If you’re turned down because you don’t meet the bank or credit card issuer’s criteria for income, it might be time to ask for a raise, look for a better job or get a side gig.
  • Too many low monthly payments. Some credit limit increases are denied because the applicants have a history of making only the minimum payments each month. This might tell the bank that you have a hard time managing the amount of money you spend. It’s always best to pay the full balance each month to avoid interest charges. If you can’t do that, try to at least pay off most of the balance every month.
  • High balances on too many cards. If this is the case, your best move is to bring the balances down by paying well above the minimum payments each month and curtailing your use of the cards.
  • Too many accounts were opened within the last two years. There’s nothing necessarily wrong with having a lot of credit accounts. But if you open too many during a short period of time, credit card issuers might be wary of offering you a higher credit limit.
  • A limit increase was recently approved. If you were just approved for a credit limit increase, you’re not going to get another one until sufficient time has passed. Many banks require that you wait at least six months before asking for a credit line increase or credit card limit increase.

The Bottom Line

One question you might ask yourself is, "Is it good to increase your credit limit?" The answer largely depends on how much credit you already have, how you use your credit and how much income you have to cover credit card debt. If you’ve always been disciplined about paying your credit bills on time — and you have a history of paying balances in full each month to avoid interest charges — you should have no problem managing a higher credit limit. But if you’ve had a problem handling your debt in the past and you frequently carry a credit card balance, you’re probably better off not requesting a limit. In this case, pay down your balances and develop better habits before taking on more credit — more credit could just mean more temptation to spend. Knowing how to increase your credit card limit — and whether you even should ask for an increase to begin with — can both have a positive impact on your finances. More From Seek

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