Prior to the financial crisis, credit card issuers allowed customers to request a credit limit increase through their online accounts. Many credit limit increases were given automatically. Today, issuers are more cautious and require more information before raising credit lines. Borrowers may be wondering when is the best time to ask for a credit limit increase.Q: Hello, I recently moved from Canada to the U.S. for a well-paid position. I applied and qualified for a Capital One card with a $500 limit in March 2012. I have been using it regularly and immediately paying off the full amount instead of the minimum payments. I’m thinking of requesting an increase in my limit but I know that I might not get it. When is the best time to do it? Or should I just apply for another credit card?
- Rita M.
A: Rita, given your great track record with the card, you should not have a major problem with a simple call to Capital One to request a credit line increase. You may have to provide financial information, including your annual income and your monthly mortgage or rent payment amount. Your credit card issuer may also perform a hard pull on your credit report, which will lead to a temporary drop in your credit score.
Generally, credit card users are advised against requesting a credit limit increase during the first six months after obtaining a new credit card. Additionally, since issuers are more likely to check your credit reports, it’ll also improve your chances of getting a credit limit increase if you haven’t applied for any new lines of credit in the past six months.
Because you’ve had your card for 18 months with a solid repayment history, you might even get a credit limit increase with little to no hassle. If you want to be more diligent, you can pull one of your free credit reports from AnnualCreditReport.com to ensure that your credit profile is pristine.
However, when asked for your desired credit limit, do not give an astronomical amount. For instance, you’re likely to be rejected if you say that you’d like a $15,000 credit limit, which is an extremely large increase from $500.
I cannot tell you the correct amount to ask for because there are so many factors that matter and every issuer reviews each case independently.