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Credit cards allow you to borrow money from a card issuer for purchases you wouldn’t be able to afford on your own. But having a credit card doesn’t mean you have unlimited access to funds. When you open a credit card, you’re approved for a certain line of credit, also known as a credit limit. Once you’ve reached the limit, you can no longer use your credit card for purchases until some of your balance is paid off.
If you’ve applied for a credit card and discovered your credit limit isn’t as high as you’d like, you can request a credit limit increase. A higher credit limit can come in handy when you’re facing an unexpected expense or want to finance a large ticket item, like a car.
However, a credit limit increase may not be right for everyone. Learn how to request a credit limit increase and how best to manage and prepare for one.
What is a credit limit?
A credit limit is the amount of credit a lender will allow you to use on a credit card or line of credit before you need to pay off some of your balance. Your credit card limit will depend on several factors, including your:
- Credit score and history
- Monthly expenses
- Credit limits on any other cards you have
The card issuer’s policies and the type of card you have will also determine your credit limit. To check what your credit card limit is, you can look online at your account or find it on your credit card statement.
Increase your credit limit
If you find that your current credit limit is not enough and you’d like to increase it, there are some things you should consider first. These things can help improve your chances of getting approved for more credit.
Your credit habits and financial history have a huge influence on whether or not a credit issuer will approve you for more credit. Lenders want to be assured that you can pay off your credit card balances on time. Your income, assets, payment obligations, account behavior, length of account, and credit utilization ratio are all determinants that a lender might ask for, so come prepared.
Some credit card companies may also ask you why you’re requesting an increase and/or how much of an increase you’d like. It’s important that you are pragmatic with your credit increase request. Remember to only take on what you can reasonably pay off in full each month.
Each card issuer will have its own process for requesting and approving credit limit increases. Consult with your provider to find out how it manages credit limit increases.
In general, there are 3 main ways to get a higher credit limit.
How to Get a Higher Credit Limit
- Make a request online or by phone. Many credit issuers have the option of requesting a credit limit increase online through their website or user portal. You simply log in to your account and look for where you can request a credit increase. If some of your information has changed, such as your income, make sure to update it before submitting your request. You can also call your card issuer using the customer service number on the back of your credit card. Ask the representative if you are eligible for a credit increase, and be prepared to answer some questions regarding your request.
- Wait for an automatic credit limit increase. Sometimes your credit card issuer will automatically increase your credit limit without you even asking. This can happen when you’ve had the credit card for a while and have used it responsibly. Lenders may also invite you to increase your credit limit through email or a message on your account portal, so keep an eye out for this type of invitation (but make sure the message is legitimate before entering any account or personal information).
- Apply for a new credit card. If you’ve been steering clear of bad credit habits, you might be able to get approved for a new credit card with a higher credit limit. Even if the limit on the new card isn’t higher than the current one, opening a new line of credit will still increase your total available credit. Plus, opening a new credit card can come with some added perks such as welcome bonuses, travel rewards, and/or a 0% introductory annual percentage rate (APR).
Does a credit card increase affect your credit score?
A credit limit increase can both negatively and positively impact your credit score. If you practice responsible card activity, such as paying your bill on time and in full each month, a higher limit can boost your score by helping you keep your credit utilization low. By using 30% or less of your available credit, your credit score can increase.
However, it’s important to keep in mind that a higher credit limit can also lead to overspending. If you’re biting off more than you can chew, you’re risking adding on more debt and damaging your credit score. If you have doubts about whether or not you can manage your spending, then a credit limit increase might not be the best solution for you.
Also note that a credit increase request may require a hard inquiry on your credit report, which can make a small ding on your credit score. Not all lenders perform a hard inquiry; some may opt for a soft inquiry which has no effect on your score. Consult with your credit card provider to determine if they do a hard pull before requesting a credit limit increase.
Disadvantages and advantages of increasing your credit limit
To summarize, let’s review the pros and cons of increasing your credit limit.
|It’s a lot easier to keep your credit utilization ratio low if you have a higher credit limit.||Depending on your credit card issuer, a hard inquiry may be made on your credit report, which could cause your credit score to drop by a few points.|
|Having an increased credit limit gives you more spending power, meaning you can use your card more without the risk of maxing it out.||A higher credit limit may cause you to spend more each month, which could increase your debt and might harm your credit score.|
|You can earn more cardholder rewards when you spend more.||A higher credit limit could make you a bigger risk to lenders and lower your chances of approval on future credit applications.|
Should I increase my credit limit?
Whether you should increase the limit on your credit card will come down to your financial situation and how you manage your credit. As long as you are practicing responsible credit use and not spending more than you can afford, increasing your credit limit should be beneficial. It’s an easy way to up your spending power and lower your overall credit utilization.
But keep in mind that a credit limit increase isn’t the only way to decrease your credit utilization and reduce your odds of hitting your limit. Simply paying down your debts and paying your credit card bills multiple times per month can have the same effect without having to request a credit increase. In some cases, you may also be able to shift part of your credit line from one card to another, especially if you have multiple credit cards with the same issuer. Explore all your options to determine which is best for you.
Why did my credit limit increase automatically?
Sometimes your credit card company might automatically increase your credit limit without you requesting one. Credit card companies often evaluate accounts on an ongoing basis, and if they deem you a responsible cardholder, you may automatically receive a higher credit limit. But credit card companies can also reduce your limits automatically if they feel your spending habits are risky.
When to ask for a credit increase?
You can ask for a credit limit increase at any time, but to improve your chances of getting approved, it’s a smart idea to ask when your finances and habits are in good shape. Make a request when your credit score is high, your income has increased, and your outstanding balances are paid off.
What is a good credit limit?
There’s no ideal or “good” credit limit. A good credit limit is subjective and will ultimately depend on you and your needs.
How often can you request a credit line increase?
The general rule of thumb for requesting a credit line increase is to wait 3 – 6 months after opening an account. If you ask for multiple credit limit increases, you should wait 6 months in between requests.
How long does it take to increase your credit limit?
After requesting a credit limit increase, a decision may be made immediately, or it can take up to 30 days to hear back from your credit card company.
Does increasing your credit limit improve or hurt your credit score?
When you request a credit limit increase, a hard inquiry may be made on your credit report, which can lower your credit score by a few points in the short term. But in the long term, a credit increase can boost your credit score, as long as you are practicing good credit habits.
Remember, the best credit limit for your card is the one you can reliably pay back on time. More isn’t always better — consider how much available credit you actually need. Once you’ve decided how much credit you want, it’s a good idea to review your credit report before officially requesting a credit limit increase. Check to make sure there are no errors or strange activity on your report and that all information is accurate and up to date. You can request a copy of your credit report for free from the 3 major credit bureaus each year.