4 Steps to Getting a Credit Limit Increase
Most credit card issuers offering small spending limits to new customers, especially if they’re new to credit.
If you want to increase the credit limit on your card, these are the general steps to doing so.
[Related: MyBankTracker writer Simon increased his overall credit card limits by 22 percent. Here's what he did.]
A higher credit limit has two major benefits:
Firstly, a higher limit means you have the ability to spend more in the event you’re in an emergency.
But, it takes the role of a double-edged sword, because a larger capacity for spending means you can fall deeper into debt.
Secondly, your credit score will get a small boost as higher credit limits would reduce your debt utilization ratio.
Read on to learn how you can easily get an increase on your credit limit.
1. Have the card for at least 6 months (or 12 months to be safe).
Six months is the general time period elapsed before a credit card issuer would consider raising your credit limit.
Also, it would appear desperate when you’ve just opened an account and are already asking for a higher limit.
Card issuers want to observe your spending and repayment habits before extending your credit limit.
2. Keep balances low and pay the bill responsibly.
It does seem ironic that there’s need to prove that you don’t need a high credit limit when you request a credit limit increase.
Showing that you are a responsible credit card user is the most important step to obtaining a credit limit increase.
That often entails keep the balances below 50 percent of your card’s credit limit while making at least the minimum payments with no late payment charges.
3. Be ready to provide financial information and reason.
Card issuers have become more careful when it comes to extending credit. Prepare to answer questions regarding income and financial obligations.
Also, a commonly asked question involves why you feel you need this limit increase.
If you say it's because you're in financial distress, you'd probably get denied. A reasonable answer to that question would be “home improvement plans."
If your card offers a specific rewards program, you can explain to the issuer that you want to spend more so you can rack up rewards faster.
Friendly competition: If your card company seems hesitant to increase your limit, you can always politely tell them that you have received promotional offers from other companies and are considering making a balance transfer, but you’d prefer to stay with them.
Moreover, if you’ve recently had a promotion and your income has increased, this would be a great point to bring up to your issuer.
4. Call your card issuer and ask.
Find your card issuer phone number on the back of the credit and call them.
State that you would like to increase the spending limit on your credit card. Sometimes, the representative will ask you to specify the amount you’d like.
Credit limits increases suffer from diminishing returns. You’ll tend to be get larger credit limit increases when you have a small credit limit.
But, when your card’s credit limit reaches over $10,000, credit limit increases will be offered in smaller increments, if offered at all.
Some card issuers will not pull credit bureau reports to authorize the credit line increase but it will not hurt to confirm this with the representative.
When you inform your card issuer of the amount you want your limit to be increased to, make sure it's a reasonable request; the higher the limit request, the higher chance you have of getting your request denied.
If the request results in a pull of your credit reports, your credit score will take a small hit.
Or, don’t do anything at all
In some cases, you don’t have to do anything.
Some card issuers will automatically boost your credit limit when they feel that you’re a low credit risk, often without notifying you.
Because of financial reform and careful lending, credit limit increases are being handed out with more scrutiny.
Credit card issuers are more likely to request financial information, including income, outstanding loan information, and homeownership status, in addition to pulling credit reports.
Therefore, allow more time to pass between credit limit increase request and make sure you exhibit excellent credit responsibility before a request.
It's also important to always make sure your credit utilization ratio remains below 30 percent of your credit limit.
The lower your credit utilization percentage is, the higher your credit score will be, and thus, a better chance at getting your credit limit increased.