How to Get a Credit Card Limit Increase
Having your credit limit increased 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 a responsible adult with your credit card spending.
A bigger credit limit increases your purchasing power, but that’s not the only advantage about 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—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.
Automatic Credit Limit Increase
Some credit card issuers will increase your credit limit automatically as you demonstrate you can handle credit responsibly. That means charging only a 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 only do so upon request of the credit card holder. For starters, 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. You may also be able to request a credit limit increase online.
When you request a credit limit increase, the card issuer will likely ask for some information to process your request. For example, they may ask for your monthly income, how much you would like to have your limit increased to, 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 have built up a lot of debt in other places (such as student loans or home mortages) you may want to wait to request a credit line increase until some debt is paid off.
However, if your credit standing is good, with 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 a few days later, usually via mail.
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 accomplishing this is to call the card's customer service number to find out exactly what steps to take—each insurer is different.
Credit Limit Increase Denied
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. The Credit One Bank Visa Platinum credit card, for example, charges up to $49 when you request a credit limit increase. And, the First Premier Bankcard charges 25 percent of the increase each time you’re approved for a credit limit increase. It's worth noting that both of these cards cater to people with bad credit. If you have one of these cards (or a similar card), forego requesting a credit limit increase and, instead, move to a better credit card as soon as you qualify.