How to Increase Credit Limit
Many credit card users discover their current credit limit just isn’t enough. They may anticipate needing to buy overseas plane tickets, an extended stay hotel reservation, or perhaps a special present.
Or they may want to increase their credit limit since it could help their credit score. Dan Nainan (@comediandan), who recently asked for a credit limit increase explains how credit score is influenced "by what percentage of one's limit is outstanding. I have a $15,000 limit on my American Express card, and I frequently run it up to $5000. If I would increase the limit to $30,000, then $5000 is a much smaller percentage, which is better for my credit score."
While credit card issuers may initiate an increase, as early as six months after you first sign up for a card, you can take initiative and request an increase yourself. Here’s how to increase your chances of receiving the credit limit increase that you’re after.
- Read the terms of your card
You may find your card must be open for a certain amount of time before the card issuer will be willing to increase limits. Reviewing these and other terms associated with your card may save you (and your card issuer) time. It will also help you understand your rights as a cardholder so that you can better advocate for a limit increase.
- Review your stats
Most credit card issuers look at the following information when determining whether to grant a credit limit increase. See whether your status stacks up and document any changes that may have occurred since you signed up for the card, as evidence that you’re worthy of an increase.
- Account history: Issuers like to see frequent card usage, within the card’s limit; on-time payments; and efforts to pay more than just the minimum amount.
- Credit history: They will want to see that you have been responsible with your other credit accounts as well.
- Income: You must document the ability to repay your credit card debts, If your income alone is not enough, you may ask about adding a cosigner to your account. Conversely, be sure to tell your issuer if you have changed jobs and are making more money as that could increase your chances of getting approval on your request.
- Ask about the procedure
Once you’ve reviewed your card’s terms and you’ve gathered your important information, it’s time to contact your credit card issuer. But before you outright ask for a credit limit increase, ask the representative about the credit limit procedure. Many companies can process the request over the phone, but some may have paperwork that you need to fill out in advance.
- Follow the process
It may go without saying, but you need to follow the process outlined by the credit card issuer. If you do something wrong, you’ll have to wait a long time before you can ask again. Once you have submitted your request, you’ll likely know fairly quickly if your request has been approved.
If Your Request Is Denied
If your card issuer declines to increase your credit limit, ask for a detailed explanation for the denial and make sure you fully understand the explanation. This will help you create a plan to follow so that you can get a limit increase in the future. Diligently follow your plan and try again in six months.
Another option is to apply for a new credit card with a more flexible lender. Be sure to review the terms and read consumer reviews online so that you can identify a credit card issuer that may be more accommodating with future limit increase requests. Just keep in mind that your current creditor may have had a legitimate reason not to increase your credit limit – credit card companies know it’s usually much easier and faster to rack up debt than to pay it off. So, be sure to proceed with caution and use your new card responsibly.
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Meghan C is a contributing writer at CreditDonkey, a credit card comparison and financial education website. Our data-driven analysis has been recognized by major news outlets across the country and has helped consumers make savvy financial and lifestyle decisions.