Credit Limit Increase
A Comprehensive Guide

Asking for a credit limit increase may not seem complicated but there are a few things you can do to increase your chances of being approved. Here’s a comprehensive guide.

Credit Limit Increase

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When you apply for a credit card for the first time, you’ll be assigned a credit limit according to your credit score, your credit history, your income and your existing financial obligations.

Some card issuers, such as Wells Fargo and Bank of America, will allow you to increase your credit limit once you’ve established a responsible financial relationship with them. Some, such as Citibank, will automatically review your information periodically and might just offer an increase without you asking.

Ways To Request Your Credit Limit Increase

1. Ask for a Credit Limit Increase Online

The easiest way to request a credit line increase is to go to the card issuer's website or in-app. If the card issuer's set-up allows, you can simply fill out the form and send it in.

2. Ask for a Credit Limit Increase by Calling Your Card Issuer

If you call your card issuer's customer service number and ask for a credit line increase, be prepared to tell them why you are asking for an increase and provide information about your income and your housing expenses, such as rent or mortgage.

Some card issuers offer multiple contact options to request and increase, including calling or online within your account, such as American Express. Others require that you call and speak to someone in person, such as Chase.

Your credit card issuer may approve your request on the spot. But, low-tech card issuers may in some cases take up to 30 days, rarely more, to approve or process your request.

3. It's Important To Update Your Income Information Proactively

Your credit card issuer may decide to increase your credit limit automatically, even if you do not actively request it.

This is due to the fact that some card issuers may periodically review your information regarding income, credit, and account history, and decide to increase credit limits for customers who fall within certain criteria.

Be prepared to show income verification if and whenever asked. But also use to your advantage the question that asks about any additional income that you may rely on to pay your bills.

Basically, what this means is that if anyone in your life contributes reliably to your regular income, you can add that, and significantly boost your income information.

While some card issuers may ask you for proof of this, most will not and will instead operate on your honor and take a chance on you.

So, do not disappoint and borrow more than you can repay.

When Can You Apply for a Credit Limit Increase?

First, you obviously have to already hold a credit card account. Only existing cardholders can be accommodated. Even though each lender has different requirements, there are a few good times to ask for a credit line increase:

  • Asking your issuer for a higher limit is a great idea when you're about to graduate from school and start working.

  • Moving to a new, higher-paying position or receiving a pay raise are other factors that may make you eligible for more credit access.

  • Apply for a credit increase after six months of your first approval. You should hold off until you can show that you have a consistent history of using your card responsibly.

  • If you were denied and have since been making on time payments for many months.

  • If your credit score has increased for other reasons, such as reducing your debt load or increasing your available revolving credit. We will come back to this in a bit.

What to Do Before Asking for a Credit Line Increase

Keeping your credit profile current will help you get a faster approval because the card issuer will have less information to double-check. Make sure the address and phone number on file match before submitting your increase request.

Above all, make sure that your income and work status are included. Also, numerous credit cards issuers may review your current housing payments to ensure that additional debt won't throw you over your means.

In addition, you ought to check your credit report beforehand to make sure that there are no inaccuracies, derogatory information you are unaware of, or instances of fraud lingering on your credit profile.

You should correct any inaccurate or fraudulent activity on your credit report before applying for a credit increase.

All three major credit bureaus, Equifax, Experian and Transunion, are increasingly providing easy access to credit files. AnnualCreditReport.com is a government resource that ensures the public can obtain one free credit report annually.

Credit Karma and similar services are additional free resources to effectively monitor the health of your credit and get valuable insights to improve it.

Even if you don't intend to apply for a credit increase right now, you should make it a point to follow these procedures on a regular basis.

Additionally, it's a good idea to always try to reduce any outstanding credit card debt you may have. If you lower your debt load, card issuers will consider you a good risk customer, which increases your approval odds.

One way to do this to appeal to credit card issuers is by always keeping your total credit utilization rate well under 30%.

Does Asking for a Credit Limit Increase Damage Your Credit Score?

Usually, asking for a credit limit increase temporarily lowers your credit score by five to ten points, but it may actually raise it over time if you get approved.

Many issuers perform a "hard pull" to obtain an updated copy of your credit report, in response to your credit limit increase request.

Keep in mind that this inquiry will appear on your credit report for two years.

However, it is only a concern if your credit score is critical for something like a mortgage loan application in progress.

Most people with a healthy credit profile and credit score will not be harmed by a one-time single hard pull.

If your credit card issuer checks your credit for automatic credit limit increase without you submitting a request. They will only perform a soft pull – which does not impact your credit.

Pros and Cons of Raising Your Credit Limit

Overall, there are more benefits than drawbacks to having a higher credit limit.

However, you may be wise to monitor your credit limit based on your spending patterns and your capacity to rein in your expenditures when a credit limit increase becomes available.

Here are some benefits and drawbacks to credit limit increases:

Benefits of Requesting a Higher Credit Limit

  • You won't have to worry as much about your available credit when using your card for more credit purchases.

  • Having a higher credit limit may also help you maintain a good credit utilization rate, which is 30% of your credit evaluation.

    The higher your available credit, the less your purchases will be able to hurt your credit utilization rate and lower your credit score.

  • It is in fact smart to prevent having a high credit utilization rate by acting proactively in raising your cards' credit limits.

  • You'll be more able to pay for significantly more costly expenditures.

  • Increasing your credit limit raises the usefulness of your card, not only as a means of payment for major purchases, but also as a safety net in case of unforeseen expenses.

Cons of Requesting a Higher Credit Limit

  • You might be tempted to spend excessively and it will become much easier to do so.

  • You can quickly accumulate a large balance with a higher credit limit, but it might be more challenging to pay it off.

  • A credit limit increase does not cause overspending but can make overspending much easier if you’re not cautious about your spending on credit and its potential consequences.

  • Your credit may be impacted by too many credit inquiries as credit card issuers perform a hard inquiry on each credit increase request.

What to Do if Your Request is Turned Down

If your credit limit increase request is turned down, card issuers are required to tell you why.

You might get a message immediately that spells out why your request was declined. You will also get a letter to notify you of the action taken.

One option is to immediately contact the issuer’s reconsideration line if you feel that you have an argument they may have missed or information they need to rectify, that might cause them to change their decision.

In case their decision is without appeal, you should try to fix the problem before submitting a new request for an increase. You may need to establish a stronger credit profile if you don't have much of one. This could start by taking  few months to show a pattern of responsible credit use, on time payments, etc.

Final Words: At any stage of your credit limit increase journey, it is essential to always do the following:

  • Pay your bills and credit cards on time each month
  • Pay more than the minimum amount due each month
  • If and when feasible, pay off outstanding accounts. In fact, from a consumer standpoint, it’s always better if you can pay the full balance on your credit card at the end of each monthly cycle
  • Lower your credit utilization rate. Card issuers prefer to see it well below 30%
  • Shop for other credit cards, especially if you were denied even though your credit is strong
  • Use your existing cards more frequently for small purchases you can pay off in the same month. When a cardholder isn't using their existing credit, card issuers don't always give them more credit. In some cases, they may even lower the credit limit.

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