When you are approved for a credit card for the first time, the issuer will provide you with a credit limit based on your credit score, credit history, income, and existing financial obligations. Some card issuers may offer a higher credit limit once you establish a responsible financial relationship with them. However, you can also request a credit increase if needed.
The actual process of requesting a credit line increase is straightforward. However, there are several ways to improve the chances of approval.
Should I Increase My Credit Limit?
There is no exact measure of how much credit you should have, but generally speaking, a high credit limit is a good thing (assuming that you manage your credit responsibly and do not spend beyond your means).
A credit increase is often the fastest, easiest way to increase your spending power. Having more available credit means you’ll be in a better position to charge large purchases or several small purchases. Increasing your credit limit is also easier than getting a new card because you’ll only have one account and bill to keep track of.
When Are You Eligible for Increased Credit Line?
There are several appropriate opportunities to request an increase in the credit limit. Graduating from school and entering the workforce is a good time to ask your issuer for a higher limit. A pay raise or moving to a new, higher-paying job also indicates that you might be eligible for additional credit access.
While each lender has specific criteria for granting increases, only established cardholders should expect to receive it. Sensibly, banks will only lend additional money to customers they have reason to trust, and this trust should be established over time.
If you have been approved for a credit increase, you can request another as soon as six months later. If you have been denied, you will want to wait until you can demonstrate a pattern of responsible card use. If you improve your payment habits or if your credit score has increased for other reasons, your chances will improve.
What To Do Before Requesting A Credit Line Increase
Ensuring that your credit profile is updated can help you make quick decisions because the card issuer will have less information to verify.
Before requesting an increase, verify the address and phone number on file. More importantly, make sure that your employment status and income are accurate. Many cards will also verify your current housing payment (mortgage and/or rent) to ensure that the credit increase will not strain your budget.
You should already review your credit report to ensure that there is no error or fraudulent activity. While consumers are generally eligible for three free credit reports per year (one each from Experian, Equifax, and TransUnion), all three major credit bureaus are offering weekly access at least until December 2023; typically, it’s once per year. If there is any incorrect or fraudulent activity, you will want to correct your credit report before requesting a credit increase.
In addition, if capable, you would want to pay off the remaining balance on your existing credit card. If your current debt level is low, the card issuer will consider you less risky.
These are all steps that you should take regularly, even if you are not planning to request a credit increase in the immediate future.
Does Requesting a Credit Limit Increase Affect Your Credit Score?
Typically, a credit limit increase request temporarily reduces your credit score by five to ten points, but over time, an increase in the credit limit can actually improve your credit score.
When you request a credit limit increase, many issuers can pull an updated copy of your credit report, known as a hard inquiry. This inquiry will become part of your credit record and often causes a small, temporary disruption in your score.
However, if your request is approved and your credit limit increases, you will have more available credit and potentially a lower credit utilization rate. As long as you have the card, these factors can contribute to a significant increase in your credit score.
What Are the Benefits of a High Credit Limit?
The top benefit of a high credit limit is the ability to spend more on your credit card, especially if you started with a relatively low limit.
By charging more on your card, you have the opportunity to earn additional reward points or cash back, along with included benefits such as extended warranty or cell phone insurance. Typically, purchases with cash or debit cards do not provide these equivalent benefits.
In addition, as a result of a high credit limit, your credit utilization rate can decrease, which can also improve your credit score and help you qualify for loans or credit applications at more favorable rates.
Even if you don’t expect to spend more than your current limit, requesting a credit increase can still be beneficial. When you keep your spending steady but increase the overall limit, your credit utilization rate will decrease. This can actually boost your credit score because other lenders see that you are not dependent on your entire credit line.
A good rule is to keep your credit utilization rate at 30% or less. So if you have a $5,000 limit, that means keeping a balance of $1,500 or less. If your credit limit was increased to $10,000, that same utilization rate would mean you could comfortably keep a balance of $3,000.
How to Increase Your Credit Limit
There are two ways to contact for a credit increase: an online request or a phone call to your card issuer.
Requesting Credit Increase Online
If you feel that you have a strong case for a credit increase, making an online request can be simple and effective. After logging into your account, most card issuers have a menu option to request a credit increase. Often it takes just one or two clicks to submit your information and you may receive instant approval. Other times, you may need to provide additional information via secure message or phone.
Typically this option is best if you believe that you have high chances of getting your credit increased (the case is clear and no additional clarification is needed). Coincidentally all issuers will not allow you to dispute the decision or reapply immediately; there may be a waiting period after denial.
Requesting a Credit Increase by Phone
If you don’t think your case is straightforward, you might want to call your card issuer and speak with a representative so you can provide more information than what’s available through the online form.
Calling is also a good way to find out what type of credit check your issuer needs to process your request. A soft inquiry will not be apparent to other lenders evaluating your credit, but hard inquiries are visible for at least 24 months. Hard inquiries can also temporarily lower your credit score by a few points. If you hope to apply for a mortgage, auto loan, or new credit card in the near future, the difference between a hard pull versus a soft pull matters.
If you need a credit increase immediately, such as for a large, upcoming purchase, you might also want to make your request by phone. The representative you speak with can expedite the information collection process so you don’t have to wait for follow-up. Undoubtedly, you still won’t get an immediate decision.
What to Do If Your Request Is Denied?
Some card issuers will tell you the reason for denial, in which case you should work on resolving the issue before making another increase request.
If your credit history is limited, you may need to establish a credit history. To determine whether you are eligible for more credit access, card issuers need to see a history of timely payments and responsible credit use.
If you’re uncertain about the specific reason why your request was denied, you’ll want to improve your general eligibility:
- Pay your credit card and other bills on time every month
- Make more than the minimum monthly payment and where possible pay off the existing balance
- Lower your credit utilization rate
- Settle any existing collection accounts
Finally, if despite having excellent credit you were denied, you may need to use that particular card more often. Card issuers don’t always issue additional credit to cardholders who aren’t using the credit they already have.
Don’t Overdo It
When you’re approved for an increase in your credit limit, you’ll have access to the full amount immediately. If you’ve requested an increase for a specific purchase, make sure to stay within your budgeted amount and plan for paying off the balance.
Some cardholders may be tempted to spend more with access to more credit. If this sounds like you, don’t actually request more credit than needed. While it benefits your credit utilization rate, it’s better not to tempt yourself. After all, responsible credit use is the most important way to maintain or improve your credit score.
What Happens If You Exceed Your Credit Limit?
Often, if a purchase amount would exceed your credit limit, the transaction will be declined, potentially leaving you without a way to cover the cost.
However, sometimes a charge slips through and puts you over your credit limit. If this happens, you may have to pay a fee to your card issuer. In addition, your bank may increase your interest rate for a period or permanently, or even close your credit account, especially if this happens more than once.
Keep in mind that your credit score can drop even before you reach close to your credit limit. As a reminder, keep your credit utilization rate at 30% or less for a healthy score. If you go just a few dollars over your limit, you should expect a significant drop in your score. This is a sign of risk to credit issuers.
To track your monthly spending in relation to your credit limit, simply log into your account online or via the app (or call the toll-free number on the back of your card).
Options for Requesting an Increase in Credit Line
For cardholders who have multiple credit cards with the same issuer, they may be able to transfer part of their credit line from one card to another. This is an easy way to increase the spending ability of one card without the issuer taking on additional risk. This can help if you need to make a large purchase in one transaction or if you prefer the rewards or other benefits of a particular card.
Applying for a new card is also an option. This can be a great way to take advantage of new or ongoing cardholder benefits such as welcome bonuses, travel rewards programs, or 0% introductory APR. It’s also a way to get additional credit when you’ve already reached the maximum credit line given to you by a single issuer.
Requesting an increase in credit limit is easy, but several factors affect your chances of approval. Being a responsible cardholder and timing the increase request right can improve the likelihood of getting the full amount requested.