Getting a credit limit increase feels a little like getting a promotion or raise on your job. While not exactly as monumental, it’s still a big moment in your credit life, especially if you're new to credit or rebuilding a bad credit score. An increase in your credit limit feels like a thumbs up, letting you know you’ve been responsible with your credit card spending.
A bigger credit limit increases your purchasing power, but that’s not the only advantage of a higher credit limit. A higher credit limit can mean good things for your credit score—as long as you don’t go on a shopping spree and use up your newly available credit. It's important to know that thirty percent of your credit score is based on your level of debt. A major part of that is your credit utilization or the amount of available credit you’re using. A credit limit increase will lower your credit utilization ratio—assuming you keep the same balance or pay it down. This translates to a higher credit score.
Here's how to go about getting a credit limit increase and raising your credit score in the process.
Automatic Credit Limit Increase
Some credit card issuers automatically raise your credit limit as you handle credit responsibly. That means charging only a manageable percentage of your total credit limit and making your payments on time each month. Many credit card issuers review accounts periodically and automatically raise the credit limit for cardholders who meet their criteria.
Requesting an Increase From Your Card Issuer
While some credit card issuers automatically increase your credit limit, others will only raise your limit if you ask. To start the process, call the toll-free number (either posted on the back of your card or on your monthly bill) and listen to the prompts—there may be a prompt for requesting a credit limit increase. If not, choose the option to speak to a customer service representative and ask for an increased credit limit.
Some credit card issuers let you request a credit limit increase from your online account. Log in and look for a menu option to request a credit limit increase.
The card issuer will likely ask for some additional information to process your request. For example, they may ask for your monthly income, the credit limit increase you're requesting, and the reason for the increase.
The Soft and Hard Pull
To process your request, the credit card issuer may access your credit report via a hard or soft pull depending on the credit card issuer. A soft pull or inquiry won’t affect your credit score; these are the types of inquiries that appear only on your version of your credit report. However, a hard pull can affect your credit score depending on the other information contained in your credit report.
The hard inquiry will appear on all versions of your credit report for up to two years. If you've built up a lot of debt in other places (such as student loans or home mortgages) you may wait to request a credit line increase until some debt is paid off.
If you're concerned about adding inquiries to your credit report, ask your credit card issuer whether they'll do a soft or hard credit check before proceeding.
Increase Your Security Deposit
If you have a secured credit limit, you can typically raise your credit limit by paying more towards your security deposit. The best option for increasing your credit limit on a secured credit card is to call the card's customer service number to find out the exact steps to take—each issuer is different.
Credit Limit Increase Denied
If your account is in good standing and you have enough income to support a credit line increase, you may find out immediately if your request has been approved. If not, the card issuer will notify you of the decision a few days later, usually via mail.
Your credit limit increase may be denied for a few different reasons. Your account may be too new, it may be too soon since the last change in your credit limit, your income may be too low to qualify you for an increase, or you may have an account that doesn't receive credit limit increases, such as a secured credit card account.
Also, negative information in your credit history can lead to your credit limit increase request being denied. In that case, you’ll receive an adverse action letter explaining the factors, which could include recent delinquencies or high credit card balances. You’ll also get a free credit score disclosure if your credit score was used in the decision to decline your request.
If your request isn’t approved this time, take note of the reason(s) listed in the adverse action letter. Improve your credit in those areas, wait a few months, and then try again.
Beware of Credit Limit Increase Fees
Be aware that some credit cards charge a fee to increase your credit limit. For one, the First Premier Bankcard charges 25% of the increase each time you’re approved for a credit limit increase. It's worth noting that this card caters to people with bad credit. If you have a similar card, forego requesting a credit limit increase and, instead, move to a better credit card as soon as you qualify.
Frequently Asked Questions (FAQs)
How many times can you ask for a credit limit increase?
You can ask for a credit limit increase as many times as you'd like, but the more often you ask, the less likely you are to get your increase approved. Waiting a few months between requests could help improve your chances.
How much of my credit limit should I use?
As a rule of thumb, it's best to keep your credit utilization ratio below 30%. For example, if your credit limit is $100, you should try to keep your debt below $30.
How do you avoid a credit limit reduction?
Your credit limit will be reduced if the lender has reason to believe your riskiness has increased. There are many possible reasons why the lender could feel this way. Reductions in income, missed payments, and inactivity are all reasons why a lender may reduce your credit limit. However, this is entirely up to the lender, and these situations do not necessarily mean your credit limit will be reduced.