6 Ways to Increase Your Credit Limit
A good credit score plays a key role in your financial well-being. The better it is, the easier it is for you to qualify for a mortgage or car and student loans. An easy way to increase your credit rating is to get a higher spending limit on your credit card. Fox Business writes that by lowering your credit utilization ratio, which is the percentage of your available credit that you are using, you can boost your credit score substantially.
Why? Credit utilization accounts for 30 percent of your FICO score. Keep in mind, the lower your total credit utilization, the higher your possible FICO score. But before you embark on requesting a higher spending limit, make sure you’re doing it for the right, responsible reason. Ready to boost your credit rating? These six suggestions will help you get your credit card limit increased.
1. Don’t ask too soon or for too much
“Most credit card companies will automatically review your credit after about six months or so of card membership,” Ken Lin, CEO of CreditKarma.com, tells Time. “However, if this doesn’t occur, you can call up your issuer to request an increase.” Don’t request a limit increase within six months of getting a new card, however. It could be an instant red flag that could lead to denial.
Try to be conservative when you’re requesting an increase, Time suggests. Your issuer will typically base its decision on your credit and what kind of a line increase you ask for. You shouldn’t ask or expect for an issuer to double your credit line. Stick with between 10 to 25 percent. If you do ask for too much and get declined, you’ll most likely have to wait at least two to three months before asking again.
2. Wait for automatic increases
This is the easiest way to increase your limit, mainly because it doesn’t require you to do anything. Credit card issuers periodically review customer accounts to determine whether customers should get a credit limit increase. If you’re deemed eligible, you’ll automatically get your credit limit hiked, according to U.S. News & World Report.
The best way to get an automatic increase is to ensure your account has relatively low limits. The higher your limit, the less likely it is that your issuer will hike it for you.
3. Use your card frequently
A great way to convince your issuer you deserve more money is by using your card regularly and paying it back. CompareCards.com writes that this can sometimes require you to put a lot on your card and pay it back for several months in a row before you’re able to qualify. Spending money like this shows your issuer you need access to more funds and can handle it responsibly.
The easiest way to do this is to stop paying for things in cash and put them on your card instead. Use the cash to pay your card balance off within that billing cycle. If you continue with this system, you’ll build your credit score while increasing your chances for more credit, per CompareCards.com.
4. Limit your request to your best credit card
Make sure you aren’t requesting limit increases with all of your cards. When you request a limit increase, your issuer pulls your credit report, and that inquiry can cause a temporary dip in your credit score. Additionally, Wise Piggy writes that if credit card companies see multiple hits on your report from other card issuers, it could be a red flag for them. It comes off as you being desperate for money, causing your issuer to get nervous. A nervous issuer is likely not going to up your limit.
Instead, focus on your best credit card, and make one strong case to one company, rather than a half-attempt to a bunch of companies. If they say no, make sure you wait a couple of months before trying again with a different issuer.
5. Build your case
Now is the time to remind your issuer how long you’ve been a loyal customer, suggests Time. Make sure you let them known you have a strong payment history, and if your household income has recently increased, be sure to mention it. You should also work in a sensible reason for wanting more credit, such as you frequently travel, you want to start paying more bills with the card, or you’re hoping to earn rewards for things you’re already buying.
It’s important that you’re regularly making payments on time before requesting an increase. Late payments are viewed by issuer’s as a sign of poor money management, which is a huge red flag for most, according to CompareCards.com. In addition to making on-time payments, make higher payments than the minimum monthly; you’re proving you can handle a larger limit.
If the issuer’s immediate response is negative, Wise Piggy recommends reminding the company you have plenty of other credit card offers to choose from. Let them know you’d like to keep your business with their company, and check whether there is a supervisor who can review your request.
6. Transfer card limits
This method is a little bit outside of the box, and you should proceed with caution. U.S. News & World Report writes that this strategy is a bit more tedious and could negatively impact your credit score. Many credit card issuers allow card holders to transfer a portion of a credit card’s spending limit to another credit card account, as long as both cards are from the same issuer.
For example, if you have two different Chase cards, each with a $2,000 spending limit, you can them move $1,000 from one card’s limit to the other. There are some people who open another credit card from the same issuer solely for this purpose. Just keep in mind that should you decide to close the new card soon after transferring the spending limit, it will most likely hurt your credit score.