How To Increase Your Credit Limit
An individual’s credit limit represents the total amount of borrowing power that is permitted from all existing credit card accounts. For individuals with only one credit card account, their credit limit is simply the credit line from that one existing account.
However, many people maintain multiple credit card accounts and it therefore follows that adding up the credit lines of all accounts will equal that individual’s credit limit. When an individual seeks to increase his or her credit limit, there are several approaches that can be pursued. Let’s take a closer look.
The Benefits of a Credit Limit Increase
Attaining a credit limit increase feels good – it increases purchasing power and provides a sense of validation that one has been keeping his or her personal finances in good standing. With the increase in purchasing power comes responsibility, however, and it remains important not to misuse the additional credit on needless overspending.
Furthermore, it is important to continue making timely monthly payments on all accounts. Regardless of how a credit limit increase is achieved, it can help your credit score, as the increase in available credit lowers the credit utilization ratio (the percentage of total available credit that is actually borrowed), assuming that the total level of indebtedness remains the same.
The lower the credit utilization ratio, the better it is for a FICO credit score, and credit utilization contributes approximately 30% to a credit score.
How To Get an Automatic Credit Limit Increase
One of the most common ways to get a credit limit increase is also the easiest – in fact it requires you to do absolutely nothing! Most major credit card issuers review accounts on an ongoing basis – and if your account has been in good standing for over a year – you could find yourself the recipient of an automatic credit line increase.
Bear in mind that these are not just handed out to anybody – they go to those cardholders who consistently pay on time every month – and usually more than just the minimum payment. Additionally, since swipe fees accrue to the issuing bank when a cardholder uses the card more often, it can prove more likely that you receive an automatic credit limit increase when you use your card regularly.
The upshot is that you must continue to manage your debt balance effectively. If your card is close to maxed out already, it isn’t likely that you will receive such an increase. But if you demonstrate an ability to manage your outstanding balance responsibly, you very well may receive an automatic increase in available credit.
How to Request a Credit Line Increase
Contact your credit card issuer through the toll-free number on your monthly statement or as it appears on the back of your card. Your chances of receiving a credit line increase are directly related to your degree of preparation, as you will want to be able to explain why you are worthy of a credit increase.
The issuing bank will ask you for your annual income, monthly housing payment, address, current employment status and social security number, as well as how much of an increase you would like to receive. You should know that when you request a credit line increase, a “hard pull” will be made of your credit report and this will lower your credit score slightly.
Do not make the mistake of applying to multiple cards for multiple credit line increases, as this will lead to multiple hard pulls that can have a cumulative negative effect on your credit score. What’s more, every credit card issuer after the first one that you contact will see the string of credit requests – and this can make you appear desperate.
Banks don’t like to lend to desperate borrowers – they prefer to extend credit to those they perceive as deserving – not needy.
How Much of a Credit Line Increase Should I Ask For?
There is no one-size-fits-all answer to the question of how much of a credit line increase to ask for. You also should not ask the credit card phone representative for any help here either, as they are prohibited from giving any guidance.
Requesting an increase in the order of 10-25% of the current credit line is not excessive and will not raise any red flags that would lead to a quick denial. Depending on the strength of your financial behavior with the issuing bank, you may be able to ask for and receive more – but don’t go overboard with your ask.
A 100% increase request is not likely to go through – though it could come with a counteroffer at a lower, yet still substantial percentage increase. Asking for more than a doubling of your credit line would likely be pushing your luck.
Important Things to Remember When Seeking a Credit Line Increase
Remember – you want to communicate to the credit card issuer why you deserve a credit line increase – not why you “need” it. Be nice and remember that the person on the other end of the phone doesn’t owe you anything.
If your income has recently increased, say so. Point out how long you have been a loyal customer and if you have always made your payments on time every month – and often for considerably more than the minimum – then say so.
If you’re utilizing less than 30% of your available credit, say so. If you’re open to a balance transfer that would involve sending some higher-interest rate debt from another card over to the card you’re asking for the increase on, make that clear as well. Try not to go overboard with your credit line increase requests if you plan on attempting them on multiple cards.
Space them out a few months apart so as not to appear desperate and accumulate too many hard pulls in too short a period of time. And remember – sometimes opening an entirely new credit card account – regardless of the size of the credit limit initially attached to it – can prove effective as well.
This will raise your credit limit, provide an increase in purchasing power, lower your credit utilization ratio and strengthen your credit score. Not bad. Just be sure – regardless of how you increase your credit limit – to always manage your credit cards and debt level responsibly.
No one really wants to go bankrupt, and neither did my family
No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy...
I had been through about 5 different credit counseling agencies before I found United Settlement
I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed...
As a business facing some unwanted financial difficulties
As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement....
I had no clue how to create a debt management plan
I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle....
Being burdened by debt is one of the biggest struggles we faced as a family
Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt...
Student loan debt was my worst enemy before I ran into United Settlement
Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was...
I never thought about settling our credit and auto loan debts
I never thought about settling our credit and auto loan debts. I honestly thought the only way out of our situation was to go bankrupt. But that all changed when we reached out to United Settlement. We...
We were dealing with extremely high-interest rates on debt
We were dealing with extremely high-interest rates on debt. That made it difficult to make improvements in what we owed. We were pretty much devastated. By our debt because we really wanted to buy a house...
Auto loans are my family’s biggest problem
Auto loans are my family’s biggest problem. Sure, having them is a necessary evil in our modern era. We spent years trying to pay our auto loans off. But the problem was, we never could make headway....
Bankruptcy was not an option I wanted to use
Bankruptcy was not an option I really wanted to use. I wanted to find an alternative to this process that would enable me to get rid of my debt for good without having a bad mark on my credit history. That...
United Settlement was there for me when I could not be there for myself
United Settlement was there for me when I could not be there for myself. I was not sure how to move forward when I had a massive amount of debt. I could not figure out how to get out from under the seemingly...
I had no idea that I could reorganize my utility builds or residential leases
I had no idea that I could reorganize my utility builds or residential leases. But United Settlement helped me see that I could. They were very friendly in telling us about what our options were as a family...
Everybody knows how ridiculous student loans are
Everybody knows how ridiculous student loans are, and that was not lost on me when I chose to take out hundreds of thousands in student loan debt. Relieving a measure of pressure for my student loans was...
Restructuring business debt is not an easy thing to do
Restructuring business debt is not an easy thing to do. But United Settlement was great at helping me figure that out. Understanding financial situations and goals was what I really wanted, and they did...
I had no clue that I was paying more than 100% APR on my small business loan
When I reached out to United Settlement, I had no clue that I was paying more than 100% APR on my small business loan. I could not believe it! But I was paying that much which meant I could not ever get...
Handling my business debt was not something I looked forward to
Handling my business debt was not something I looked forward to. But United Settlement was so patient with my questions and helped me figure out how to handle my debt as a small business owner. I qualified...
I didn't even know what type of interest rates there were and how those affected my debt overall
When I contacted United Settlement, I didn't even know what type of interest rates there were and how those affected my debt overall. So, when I went to go buy a new house, I was shocked to find out that...
Debt settlement is what we signed up for when we were interested in using United Settlement
Debt settlement is what we signed up for when we were interested in using United Settlement. We needed a company to negotiate on our behalf to help us reduce the total amount of debt we owed, and we were...
I had no idea that I could lower my credit card interest rates. But when I contacted United Settlement, they explained to me that I could negotiate my interest rates down lower along with my payoff balance....
If you have ever had an unmanageable amount of credit card debt
If you have ever had an unmanageable amount of credit card debt, you know how ridiculous it is to try to pay it off. In my situation, I did not want to wait until the last moment to get this debt under...