How to Raise Your Credit Card Limit

There are many reasons to seek a higher credit limit. It gives you the freedom to make larger purchases. And it can even boost your credit score, which can help secure better loan terms and credit card offers in the future.

But used improperly, a higher credit limit could hurt you more than it helps. Here’s a short guide on when and how to ask for a higher credit limit — and when not to.

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Should I apply for an increased credit card limit?

The first step in determining if you should apply for a credit limit increase is to ask yourself why you want it. If money is tight and you need every bit of credit you can get in order to keep the lights on, then it’s probably not a good idea. Racking up large amounts of credit card debt can hurt your credit score. And if you fall behind on your payments, it might be tough to recover due to the high interest rates.

It’s also not a good idea to apply for a higher credit limit if your credit score is fair or poor — that is, about 669 or below. In that case, you’re unlikely to be approved, and you’ll still incur a hard inquiry on your credit report when the card issuer checks your credit score. This can end up lowering your score even further.

For most people, a single hard credit inquiry could knock anywhere from one to five points off your credit score, and that number could be higher for those with a short credit history or those with multiple hard inquiries close together.

But if your credit is good — 670 or above — and you’re not looking to go on a spending spree, then increasing your credit limit can be a smart financial move. It lowers your credit utilization ratio — the amount of credit you’re using compared to the amount you’re eligible for. A low credit utilization ratio looks good to creditors and says that you’re living comfortably within your means. It’s best to keep your credit utilization ratio at 30% or less whenever possible.

What affects my ability to get a credit limit increase?

Whenever you apply for a new credit card or request an increase on an existing card, the card issuer will pull your credit report. This report compiles data about your income, debt, and payment history to provide creditors with a snapshot of how financially responsible you are.

One of the most important factors is your debt-to-income ratio. This is similar to your credit utilization ratio, but it takes into account all your debt and measures it against your total income. A good debt-to-income ratio is 35% or less, and if you have a ratio of 50% or more, creditors may be hesitant to increase your credit limit in case you rack up debt that you aren’t able to repay.

Card issuers also look at your payment history. If you have a number of missed or late payments, they may be less likely to extend you a line of credit or increase your existing credit limit because there is a greater likelihood that you won’t be able to pay them back.

The length of your credit history plays a role as well. Young adults who have only a single credit card may have a hard time getting a credit limit increase, simply because there is not enough information for creditors to determine how responsible they are going to be with their money.

If you have a co-signer, that person’s credit report will also be evaluated when you apply for the card. If the co-signer’s credit is better than yours, you may be eligible for a higher credit limit than you could get on your own because the credit card company has a means to recoup its money if you don’t pay.

How do I apply for a credit limit increase?

Some credit card companies will automatically increase your credit limit once you’ve proved yourself to be a responsible cardholder. This means paying on time and not using too much of your existing line of credit.

If your card issuer doesn’t offer automatic increases, you will have to request one yourself. Usually, this can be done on the company’s website or by calling the company. You may have to provide updated information about your income in order to determine your eligibility.

Once you’ve submitted your request, the creditor will evaluate your account and decide on the request. If you are denied, you will receive a written notice explaining why.

What if I’m denied?

You have a few options if your card issuer denies your credit limit increase. A good place to start is to read the notice of denial and take steps to correct the issues the card company flagged. That may mean making an effort to pay off existing debt or getting better about making your payments on time. Once you’ve demonstrated that you are responsibly managing your existing credit, you can reapply for the credit limit increase.

You could also try applying for a different credit card that offers a higher limit, but be realistic about your chances of approval. If you apply for the card and are denied, your credit score is going to take another hit from another hard inquiry.

If you know your credit is poor, you may want to consider signing up for a secured credit card instead. These cards are designed to help people with poor credit improve their credit score over time. Credit limits are usually under $1,000, and you’re required to put down a refundable deposit when you sign up, which lessens the risk to the card issuer in case you fail to pay. Your monthly payment history is sent to the credit bureaus, and responsible use of a secured credit card can go a long way toward repairing poor credit.

You should only sign up for a secured credit card as a last resort, though. These cards often come with annual fees and high interest rates that could end up costing you hundreds or even thousands of dollars more if you fall behind on your payments.

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