5 Key Tips to Raise Your Credit Limit
As long as you’re able to keep your spending in check, there are countless reasons why it’s a good idea to work towards a credit line increase.
If you increase credit limit, you can improve your overall credit score and fund larger — but still responsible — purchases without having to dip into your savings. A higher credit limit is also proof that you’ve been able to make your payments on time and exercise fiscal responsibility.
Though it’s important to aim to keep the balance on a credit card at 30% or less of your entire credit limit, if you’ve recently started earning more income or can now afford to pay over your minimum each month, it makes sense to increase your limit.
But how can you make that happen?
Keep on reading this post to find out.
1. Wait for It
The best way to increase credit limit options is simply to be patient.
Especially if you make more than the minimum payments consistently, and if those payments are always on time, your credit card company may increase your limit automatically.
Usually, credit card companies will review your account about once every six months, and decide if you’ve “earned” an increase in your limit.
Of course, depending on your current financial situation, you may not be in a position to wait for an automatic increase. Luckily, you still have other options.
2. Formally Request a Credit Limit Increase
You can put in a credit limit increase request online or over the telephone.
Usually, you’ll need to provide the representative with a few more details of your financial life. You’ll answer questions about your current income, your payment history, and potentially even how long you’ve had an active account with the company.
You don’t need to let the representative know exactly what you’re planning to use the money for (in fact, you may not even know.) But you can make your case based on your history with them.
Be patient and polite — it sounds basic, but it really does go a long way.
Be aware that asking for an increase may temporarily knock down your credit score.
3. Get a New Credit Card
The average American citizen has about 3 different credit cards.
Sometimes, if you want to get a higher credit limit, one of the best things you can do is to simply apply for a new credit card that offers a larger limit.
Of course, as with hard pulls when you request an increase on an existing card, applying for a new credit card will also ding your credit score. So, before you go for this option, we suggest looking into your existing cards first.
However, especially if the card you’re looking into offers better rewards and 0% interest for a year, it may be the right option for you.
Just avoid falling into the dangerous cycle of credit card churning — that’s a fast track to a lifetime of debt.
4. Be Smart About the Amount You Request
When you first apply for a credit card increase, we know that it’s especially tempting to ask for more than you probably need.
You have visions of all the fun — but usually not exactly necessary — purchases that a higher limit would allow you to make. But before you ask for a serious increase, you need to understand why that’s not always the best move.
Credit card companies often see this as a red flag and are much more likely to deny limit increase requests that are disproportionate to someone’s credit history and income levels.
These denials hurt your credit score, and they also mean that you’ll be stuck waiting through the next few months with no limit increase at all until you’re able to apply again.
Now is also the time to study up on any potential limit increase fees that you could incur.
5. Ensure You Can Make On-Time Payments
When you’re ready to raise credit card limit, one of the most important things to evaluate is whether or not you can truly afford to make higher monthly payments — and still make them on time.
Now is also the time to evaluate and potentially redesign your personal budget.
Are there subscription services you don’t really use? Are you spending a large portion of your income on a particular area, like eating out or expensive clothing?
Look for what you can cut, and prioritize making your monthly credit card payments above all else.
Even if you miss a single credit card payment, your score — and your ability to be approved for an even bigger limit increase in the future — will take a big hit. Especially if you want to increase your limit to improve your credit score, make sure you don’t accidentally make the situation worse.
Remember that just because you’ve been approved for a higher credit limit, doesn’t mean you have a free pass to max it out.
Increase Credit Limit with These Tips
We hope that this post has given you a better understanding not only when it comes to how to increase credit limit, but also how to do so without putting yourself at financial risk.
Looking for additional tips on how to improve your credit score? Need to learn more about the right credit card options for you? Interested in understanding your loan options?
We’re here to help you with all that and more.
Keep checking back with our blog to get the financial advice you need to succeed, from understanding what makes a good credit score to how to understand the basics of credit bureaus.
Leave a ReplyWant to join the discussion?
Feel free to contribute!