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When you open a credit card, it comes with a maximum amount that you are allowed to borrow at any given time. This number is known as your credit limit. While you usually can’t spend more than the credit limit on your account, this number can adjust over time.
Sometimes your card issuer will increase your credit limit on its own. Other times, you might get a higher limit just by applying.
Ask yourself why you want a higher credit limit
Before we get into the tips for asking for a credit limit increase, it’s important to take a break. Ask yourself why you want the ability to charge more on your credit card.
Would you like to add an authorized user to your account and need a bigger credit limit to keep up with the increased spending?
Would you like to be able to make larger purchases and earn more rewards?
Have you heard that a higher credit limit could increase your credit scores?
If any of the above motivates you to want to increase your credit limit, asking for one might help (provided you manage your credit card well). But if you want a higher credit limit because you’ve depleted your account or rolled over a high month-to-month balance, a higher credit limit will only prepare you for more credit and financial problems down the road. ‘to come up.
How to request a credit limit increase
Once you’ve thought about it and think that a higher credit limit could be good for you, here are some tips for applying for one.
1. Prepare your credit in advance
2. Determine the amount of credit to request
3. What to say when requesting an increase
Prepare your credit in advance
Chances are, your card issuer will check your credit when you request a credit limit increase. Since you know that at least one of your credit reports will likely be checked, you should review them yourself ahead of time.
You have the right to access a free credit report from the three credit bureaus (Equifax, TransUnion and Experian) once every 12 months. Visit Annual credit report to make the request. There are also several places online where you can access your reports for free.
Likewise, the free services of Credit Karma and Experian help you increase your credit score and easily monitor your three credit reports from apps on your phone. In reality, Experian lets you add monthly Netflix subscription payments to your credit history (also free).
After downloading the reports, go through them one by one. Look for errors or mistakes. (It does.) If you find negative and inaccurate items on your credit reports, they could be damaging your credit scores. Fortunately, the Fair Credit Reporting Act allows you to dispute any questionable credit information you discover. See this guide of the Consumer Financial Protection Bureau for advice.
It is also a good idea to reduce your credit card balances to $ 0 and give them the option to update themselves with the credit bureaus. This can help your credit scores by lowering your credit utilization rate (largely responsible for 30% of your FICO score). Being less in debt can also improve your debt-to-income ratio – another factor your card issuer may consider when considering your request for a limit increase.
Determine the amount of credit to request
Before you contact your credit card issuer, you should have an idea of what you want your new credit limit to be. A good rule of thumb is to stick with an increase of around 10-25% when you apply.
For example, if your current credit limit is $ 4,000, you might consider requesting a new limit of up to $ 5,000. If you ask for a limit that makes your card issuer uncomfortable, they may offer to increase your limit (but not as much as requested) or they may reject your request altogether.
Request an increase in the credit limit
Once you’re ready to apply, you probably have a few options. Many card issuers will allow you to apply for a higher credit limit online or over the phone. A phone call will usually be your best bet. Talking to a human gives you a chance to get your point across.
Be prepared to let your credit card issuer know of any information that might work in your favor. Has your household income increased since you completed your initial credit card application? If so, tell the customer service representative when you make your request.
How asking for a higher credit limit affects your credit scores
When considering asking your credit card issuer for a higher credit limit, you should be aware of how the request might affect your credit scores. Often times, the result of a higher credit limit is positive. If your application is approved, the upper limit may reduce your rate of use of your credit. As mentioned, lower usage could give your credit scores a boost.
Of course, it is possible that your request for a credit limit increase will be refused. If this happens, your credit scores could take a hit.
The denial itself will not impact your credit. But, when your card issuer reviews your application, they will most likely check your credit report. This is called a hard inquiry or a hard pull on your credit report. Serious surveys influence 10% of your FICO score (and not in a good way). Therefore, a new credit check could slightly reduce your credit score.
Manage your new credit limit
Approving a higher credit limit has the potential to improve credit scores. However, the impact of an increase in the credit limit on your scores depends on how you manage your accounts.
Whether your credit card limit is $ 300 or $ 30,000, you should always pay your statement balance in full each month. Payments on time are also essential. Follow these rules and you will be off to the right foot.
More credit card rewards
Credit cards have a reputation for getting people into debt. Yet the idea that opening credit cards is a bad financial choice is neither fair nor accurate. You decide how you will use your credit cards, just as you decide how you will use the money in your bank account.
Our Card Raids help people maximize their credit card reward earnings for their daily planned spending. Here are a few to get you started:
If you’re confident that you can manage your credit cards responsibly (paying on time and in full every month), your accounts can be an asset rather than a burden. A well-managed credit card can help you build better credit scores over time and can help you take advantage of some precious rewards.
Although we work hard on our research, we don’t always provide a complete list of all available offers from credit card companies and banks. And because offers may change, we cannot guarantee that our information will always be up to date, so we encourage you to check all terms and conditions of any financial product before applying.