Increasing your credit limit is similar to getting a job promotion or raise. Even if it's not quite as significant, it's still a significant milestone in your credit history, particularly if you're new to credit or trying to repair a bad credit score. An increase in your credit limit is like a pat on the back, indicating that you've been responsible for your credit card usage. You'll have more purchasing power if you have a higher credit limit, but that isn't the only benefit. A higher credit limit can help your credit score if you don't go on a shopping spree with your newly available credit. It's crucial to remember that your debt level accounts for 30% of your credit score. Credit utilization, or how much of your available credit you're using, is a big part of that. If you keep your balance the same or pay it down, an increased credit limit will lower your credit utilization ratio—a higher credit score results as a result of this. Here's how to increase your credit limit while simultaneously improving your credit score.
Automatically Increased Credit Limits
Some credit card companies will automatically increase your credit limit as you manage your credit responsibly. That means using only a small portion of your total credit limit and paying your monthly bills on time. Many credit card companies conduct periodic reviews of accounts and automatically raise credit limits for cardholders who meet certain criteria.Getting Your Card Issuer to Increase Your Limits
While some credit card companies will automatically raise your credit limit, others will only do so if you request it. To begin, dial the toll-free number (found on the back of your card or on your monthly bill) and follow the prompts—a prompt for requesting a credit limit increase may appear. If not, select the option to speak with a customer service representative and request a credit limit increase. With some credit card companies, you can request a credit limit increase from your online account. Log in and look for a menu item to request an increase in your credit limit. To process your request, the card issuer will most likely ask for some additional information. They might inquire about your monthly income, the credit limit increase you're seeking, and the reason for the increase, for example.The Pull of Soft and Hard
Depending on the credit card issuer, the credit card issuer may access your credit report via a hard or soft pull to process your request. Soft pulls or inquiries have no effect on your credit score because they appear only on your version of your credit report. However, depending on the other information on your credit report, a hard pull can have an impact on your credit score. The hard inquiry will be visible on all versions of your credit report for up to two years. If you have a lot of debt from other sources (such as student loans or home mortgages), you may want to wait until some of that debt is paid off before requesting a credit line increase. If you're worried about adding inquiries to your credit report, find out whether your credit card issuer will perform a soft or hard credit check before proceeding.Your security deposit should be increased.
You can typically increase your credit limit by paying more toward your security deposit if your credit limit is secured. The best way to increase your credit limit on a secured credit card is to call the card's customer service number and ask for specific instructions—each issuer is different.An increase in credit limit is not permitted
If your account is in good standing and you have sufficient income to support a credit line increase, you may receive an immediate response to your request. If not, the card issuer will contact you a few days later, usually by mail, to inform you of the decision. A credit limit increase could be denied for a variety of reasons. It's possible that your account is too new, that it's been too long since your credit limit was changed, that your income is too low to qualify for an increase, or that you have an account that doesn't receive credit limit increases, such as a secured credit card account. Additionally, if you have negative information on your credit report, your request for a credit limit increase may be denied. In that case, you'll get a letter explaining the reasons for the adverse action, which could include recent delinquencies or high credit card balances. If your credit score were used in the decision to decline your request, you'd also receive a free credit score disclosure. Make a note of the reason(s) mentioned in the adverse action letter if your request is not approved this time. Improve your credit in those areas first, then reapply after a few months.Fees for increasing your credit limit should be avoided
Be aware that increasing your credit limit on some credit cards may incur a fee. For starters, each time you're approved for a credit limit increase, the First Premier Bankcard will charge you 25% of the increase. It's important to note that this card is designed for people with bad credit. If you have a card like this, don't ask for a credit limit increase; instead, switch to a better credit card as soon as you qualify.Most Commonly Asked Questions (FAQs)
How many times can you request an increase in your credit limit?
You can request an increase in your credit limit as many times as you want, but the more requests you make, the less likely your request will be approved. Waiting a few months between requests might help you get a better response.I'm not sure how much of my credit limit I should use
It's best to keep your credit utilisation ratio below 30% as a general rule. If your credit limit is $100, for example, you should try to keep your debt below $30.How can you avoid ving your credit lihamit reduced?
If the lender believes your riskiness has increased, your credit limit will be lowered. The lender could be feeling this way for a variety of reasons. A lender may reduce your credit limit due to a decrease in income, missed payments, or inactivity. However, the lender has complete discretion in this regard, and these circumstances do not always imply a reduction in your credit limit.