Getting a higher credit card limit can open the door to several new opportunities. One major benefit is that it can actually improve your credit score, assuming you don’t quickly accrue a large balance. You can also use a higher limit to maximize your credit card rewards points. If you charge more and pay off your balance right away, you can take advantage of more travel or cashback earnings.
Of course, some people may wish to get a higher limit in order to charge more. If you fall under this category, try to find alternative solutions to your cash flow issues so you don’t end up with overwhelming debt.
Assuming you have a clear strategy in mind for your higher credit card limit, there are typically three ways you can access a larger spending limit. Learn more about each tactic, plus how using a higher card limit the smart way could help boost your credit score.
Credit Benefits of a Higher Card Limit
Even if you don’t plan on using the additional credit available on your card, increasing your limit can actually help your credit. One of the largest contributing factors of your credit score is your credit utilization. This refers to how much revolving debt you have compared to how much credit is actually available to you.
If your credit utilization ratio is low, that means you’re not using much of your credit, which is better for your credit score. If your ratio is high, that means you’re carrying large balances on your credit cards.
The ideal credit utilization ratio for good credit is 30% or less. This applies to both individual cards and your overall revolving credit accounts. For example, if you have a $10,000 credit card limit with a $4,000 balance, your credit utilization is 40%
To improve your credit score you need to bring down that ratio. You can either pay down your debt $1,000 or you can ask for an increase on your credit card limit (or a combination of both). In this scenario, if your card limit was extended to $14,000, you’d automatically drop below the 30% ratio. Even if you were approved for a smaller increase, you’d have less debt to pay off to reach the optimal ratio.
If you apply for an entirely new card and don’t carry a balance, you’ll also help lower your overall credit utilization, which is also considered as part of your credit score.
Ask for an Increase on an Existing Credit Card
Requesting a credit card limit increase on a current account isn’t difficult, but you’re more likely to find success if you have a plan in advance. Before you call the customer service line, follow these three tips to improve your odds.
What to Say
You typically need to meet a few qualifications in order to get approved for a credit card increase so have your argument laid out in advance. First, mention how long you’ve been a customer. At a minimum, you should have your card for six months before requesting a limit bump, but it’s even better if your history is longer. Note during your conversation that you’ve been a loyal customer for the exact amount of time you’ve had your card.
Next, you shouldn’t have any recent late payments on the card. Mention that you consistently make minimum balance payments (or more, if that’s the case). If you’re requesting an increase specifically to boost your credit score, feel free to say that. Another positive argument is if you’ve recently received a raise or higher paying job.
Avoid pitching your situation as financially precarious, since that can raise a red flag to your credit card company. Also, remember that you’re speaking to a real person and general politeness can help a lot in getting your request approved.
Start with the card you think you’re most likely to be approved based on the criteria above. Even though you have an existing account with the creditor, they’ll still pull your most recent credit report and score. They may be concerned if they see multiple other credit card inquiries recently. Plus, every new inquiry results in a small drop in your score. If you have too many, you may see a large drop.
How Much to Ask For
Go into your request with reasonable expectations. The results you can expect to receive largely revolve around how well you’ve managed your account. If you don’t have a high balance and pay your bill in full each month (or close to it), you could see a substantial increase in your credit limit. If, on the other hand, you just tend to make the minimum payments or are a newer cardholder, you may get just a 10% to 25% increase.
When you call and request a credit limit, you can ask for a specific amount. It’s also possible, however, to request the increase online through your account dashboard. If your credit card company offers this feature, you may also get to select the amount of increase you’d like, based on what the company is willing to offer you.
When to Wait
Sometimes patience is a virtue when it comes to requesting a higher credit card limit. Because a new request typically counts as an inquiry on your credit report, it’s smart to be strategic. Whether you’re denied your request or know you don’t meet the qualifications discussed earlier, you can make a plan to set yourself up for success in the coming months.
Plus, most credit card companies actually provide cardholders with an automatic credit limit increases every so often. If you want to know the specifics of your company’s policy, give them a call to find out how frequently the review process takes place. You may be surprised to find out that you’re queued up to receive an increase naturally without having to make a call or log onto your account.
Understand that this may not be an automatic process and be ok with that. Increasing your credit limit should be part of a financial strategy, not an emergency solution for an immediate need. If you have a plan in place, you’re likely to get that limit bumped up, even if it does take a few months to fully come to fruition.
Apply for a New Card with a Higher Limit
Asking for a credit increase to an existing card is one tactic to get a higher limit, but you can also apply for a new card altogether. This is an ideal strategy if your credit score is already average or better. Not only are you more likely to get approved for a new card, but you could also get approved for a higher limit than your existing cards.
If your financial situation and credit have both improved since the last time you applied for a credit card, you could see some positive changes in the card terms you’re offered. This is a more straightforward option than requesting a limit increase from a card you already have. Just remember to weigh your application choices carefully since you’ll have an inquiry added to your credit report each and every time you apply.
Once you receive your new credit card, remember to use it responsibly. This helps maintain your credit health overall and keeps your financial health in check as well. Make your payments on time and pay your balance in full to remain eligible for the better credit products as your borrowing needs change with time.
Look for Balance Transfer Promotions
Another way to get a higher credit card limit is to search for balance transfer promotions. In order to qualify, you’ll need an outstanding balance on an existing card. Since balance transfer cards are designed to help you consolidate multiple balances onto a single card, you’re more likely to find options with higher balances.
This can help lower your credit utilization if you have a maxed-out credit card even if you’re not able to pay it off completely. You’ll remove your balance on the lower limit card, then reassign the debt to a card with a higher limit, taking up a smaller percentage of your overall available credit.
As with any balance transfer credit card, find out if there’s a fee involved since that can add extra costs to the process. Also see how the promotional APR compares to your current card, as well as the regular APR after the introductory period is over. Even when looking for a higher credit card limit, it’s still important to make sure you’re spending your money wisely. Otherwise, you might be better off simply using that extra cash to pay down your debt on the original card.
The Bottom Line
Before you start taking action to get a limit increase on your credit card, make sure you understand what the true purpose is behind your request. Whether you want to improve your credit or be able to charge more, always consider the underlying issues fueling your decision-making process. This is the best way to ensure you make decisions that are smart for all aspects of your life, not just the ability to get a higher limit.