Increasing the credit limit on your credit card might be beneficial or detrimental, depending on your financial situation. If you pay your credit card account in whole and on time every month, extending your credit limit can provide you with additional freedom while also improving your credit scores by lowering your credit use ratio. However, if you have a habit of overspending, a higher credit limit may exacerbate it.
Here are some methods for increasing your credit limit, as well as advice on determining whether a credit limit increase is good for you.
How to Get a Higher Credit Limit
You can apply for a higher credit limit in two ways: online or by calling your card issuer.
#1. Online Higher Credit Limit Request
If you believe you have a solid case for a credit boost, submitting a request online can be quick and easy. When you log into your account, most card companies include a menu option to request a credit boost. It only takes a few clicks to enter your information, and you may even get fast approval. In some cases, you may be required to give extra information via secure messaging or phone.
In general, this is the ideal option if you believe your chances of earning a credit increase are strong (i.e. the case is clear-cut and does not require additional explanation). Also, not all issuers will allow you to instantly contest the decision or reapply; there may be a required waiting period after denial.
#2. Phone Higher Credit Limit Request
If you don’t believe your situation is simple, contact your card issuer and speak with a representative. Speaking on the phone allows you to supply additional information not available through online forms.
Calling is also a smart approach to finding out what kind of credit check your issuer needs to process your request. Soft inquiries are not apparent to other lenders who review your credit report, but hard inquiries are visible for at least a year. In addition, hard queries can temporarily reduce your credit score by a few points. If you plan to apply for a mortgage, vehicle loan, or new credit card in the near future, the difference between a hard and soft pull on your credit is important.
If you have an urgent need for a credit boost, such as a significant, upcoming purchase, you may want to submit your request via phone. The associate you contact may be able to speed up the information-gathering process so you don’t have to wait for follow-ups. Of course, you may not get a decision right away.
Tips on How to Request a Higher Credit Limit
Card issuers are not required to approve your request, so here are a few pointers to make the process go more smoothly and boost your chances of approval.
- It’s critical to have all of the information you’ll need ready when requesting a credit limit increase. You will have to provide your entire annual income, current work status, and monthly mortgage or rent payment. You may also be required to give the amount of the requested credit limit increase.
- Prepare to justify your request for a higher limit. The representative may inquire as to why you require an increase in your credit limit and why they should fulfill your request. You can use information such as your history of on-time payments, frequent and responsible use of the card, a good credit score, an increase in income, and more to defend your case.
- Request a credit limit increase at a convenient time. Wait till your salary or annual income grows. When applying, make sure you have strong credit and a track record of paying on time.
Consider whether you want to request an increase in the credit limit on your existing card. If you determine it’s time to raise your credit limit, call the number on the back of your credit card.
What Should You Do If Your Request Is Denied?
Some card companies will tell you why your request was declined, in which case you should focus on correcting the issue before requesting another increase.
You may only need to establish your track record if you have a modest credit history. To assess whether you qualify for greater credit, card issuers will look at a history of on-time payments and appropriate credit usage.
If you don’t know why your request was denied, you should work to enhance your overall creditworthiness by:
- Every month, pay your credit card and other bills on schedule.
- Making more than the minimum monthly payment and, when possible, paying down existing debt
- Reducing your credit utilization
- Resolving any outstanding collections accounts
Finally, if you were denied despite having outstanding credit, you may need to use that card more frequently. Card companies do not always extend more credit to users who do not use their existing credit.
Benefits of a Higher Credit Limit
Obtaining a higher credit limit might be a very beneficial move to take if you want to increase your credit score.
#1. Improved Credit Utilization
When calculating your FICO credit score, five main elements are considered. Your credit utilization ratio, which accounts for 30% of your score and shows the amount of credit you have vs the amount of credit you’re presently using, is one of the most essential criteria. For example, if you have $10,000 in available credit and owe $2,500, your credit utilization ratio is 25%. That’s an excellent ratio because you want to keep your credit usage ratio below 30% as much as feasible. This is where an increase in credit limit comes in. When you have a higher credit limit, it is much easier to keep your credit use ratio low.
#2. Increased purchasing power
A higher credit limit also gives you more spending power, but be cautious because the larger the load on your credit card, the lower your credit utilization percentage will be. However, if you can pay off your purchases immediately, having a higher credit limit allows you to spend more on your card, resulting in more cardholder rewards.
#3. Better conditions in the future
Another advantage of increasing your credit limit while improving your credit score is that you may be able to enhance your borrowing terms in the future. The better conditions and cheaper interest rates you’re likely to qualify for in the future, the higher your credit score. Learning how to boost credit card limits now could save you money later when you apply for a new credit card, a mortgage, or an auto loan.
What Increases Your Chances of Getting a Higher Credit Limit?
If you determine that increasing your credit limit is the best option for you, you’ll need to know how to raise a credit limit. The key thing you should concentrate on is ensuring that your credit habits reassure lenders that you will be able to pay off your credit cards on time.
Issuers often want to know how much you earn and how much you spend on rent or mortgage payments before issuing a higher credit limit. This is because they need to know whether you’re struggling to make ends meet, which would reduce your chances of making timely payments.
Account behavior, payment history, and general utilization levels are also considered by issuers, as well as how long you’ve had your account open and how you’ve handled it thus far. Card companies want to know if you’ll repay any money you borrow based on your income, assets, and present obligations.
Some lenders additionally evaluate your age, presumably because they believe that experienced credit holders are more capable of bearing the responsibilities of a larger credit line.
What You Should Do Before Asking for a Credit Line Increase?
Keeping your credit profile up to date will help you get a faster decision because the card issuer will have less information to verify.
Verify the location and phone number on file before requesting an increase. More importantly, double-check your employment status and income. Many cards will also verify your existing housing payments (mortgage and/or rent) to ensure that a credit increase will not exceed your budget.
You should also check your credit report ahead of time to ensure that there are no inaccuracies or fraudulent activity. While individuals are generally entitled to three free credit reports per year (one from Experian, one from Equifax, and one from Transunion), all three main credit bureaus are now allowing weekly access until at least April 2022. The three major credit bureaus usually provide free access to your credit report once a year. If there is any erroneous or fraudulent activity on your credit report, you should remedy it before requesting a credit boost.
Also, if possible, pay down your existing credit card bills as much as possible. Card companies will consider you a lower risk if you have less existing debt.
These are all measures you should perform on a regular basis, even if you don’t intend to request a credit boost in the near future.
Is It Bad for Your Credit Score to Request a Credit Limit Increase?
A credit limit increase request typically lowers your credit score by five to ten points, but in the long run, it may actually raise your credit score.
Many issuers may pull an updated copy of your credit report when you request a credit limit increase, which is known as a hard inquiry. This query will be added to your credit report and will usually result in a minor, temporary drop in your credit score.
If your request is granted and your credit limit is raised, you will have more available credit and a potentially lower credit utilization rate. These factors can result in significant boosts in your credit score for as long as you keep the card.
What Happens If Your Credit Limit Is Exceeded?
A transaction is more likely to be refused if the purchase amount exceeds your credit limit, perhaps leaving you without a way to settle the cost of your purchase.
However, occasionally a charge will slip through the cracks and push you over your credit limit. If this happens, your card company may charge you fees. Furthermore, if this occurs more than once, they may raise your interest rate for a period of months or permanently, or even shut your credit account.
Remember that your credit score can suffer long before you reach your credit limit. As a reminder, you should avoid approaching your credit limit if you want to keep your credit utilization percentage under 30%. If you go over your limit, even by a few dollars, you should expect a significant decline in your score. This raises a red flag for credit providers.
To track your monthly expenditure in proportion to your credit limit, simply log into your account online or use an app (or call the toll-free number on the back of your card).
Is it hard to increase credit limit?
It’s a really straightforward technique. Don’t be disheartened if your request is turned down. When the time is right, your credit card company may raise your credit limit.
Alternatives to Requesting For a Higher Credit
Cardholders with numerous credit cards issued by the same company may be able to transfer a portion of their credit line from one card to another. This is a simple technique to improve the spending power of a single card without exposing the issuer to additional risk. If you need to make a significant purchase in a single transaction or if you like the rewards or other benefits of a specific card, this can be useful.
Applying for a new card is another apparent option. This might be an excellent method to take advantage of new or ongoing cardholder incentives like a welcome bonus, travel rewards program, or 0% introductory APR. This is also a method of obtaining additional credit once you have exhausted the maximum credit limit available from a single lender.
Conclusion
Requesting a credit line increase is simple, but various things influence your chances of acceptance. Being a responsible cardholder and requesting the raise at the appropriate time will increase your chances of receiving the full amount requested.
How To a Get a Higher Credit Limit FAQs
What is a high credit limit?
A high-limit credit card normally has a credit line ranging from $5,000 to $10,000 (and some go even higher). If you have strong or exceptional credit, you are more likely to have a greater credit limit.
Who decides your credit limit?
Banks, alternative lenders, and credit card firms determine the limitations depending on a variety of borrower-related factors. They look at the borrower’s credit score, personal income, loan repayment history, and other factors.
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