Chris Bridges, Founder and CEO, VITAL Card Inc.
Getting a credit limit increase can help significantly impact your overall financial well-being.
A higher credit limit can positively influence your spending power and lower your credit utilization, also known as the ratio of debt to available credit. Lower utilization rates are often associated with better credit scores.
The best time to request an increased credit limit is as soon as you have started working or received a pay raise. The same goes for a new job or transitioning to a better-paying position.
Remember that making too many requests for a credit limit increase at one time may adversely impact your credit score. Apply only when you genuinely need the extra credit.
What Is a Credit Limit?
Your credit limit is a ceiling on how much money you can borrow from a lender. This includes credit cards, lines of credit, and loans — generally, the higher your credit score, the higher your credit limit.
Several factors influence your creditworthiness, such as your credit history and score, and determine the credit limits for which you qualify.
Different lenders may have different ways of determining a credit limit. The most crucial factor is your ability to repay the borrowed money. A good credit score and history make you more likely to be approved for a higher credit limit.
Why Would You Want to Increase Your Credit Limit?
Increasing your credit limit can improve your credit score. Be mindful not to take advantage of this opportunity to spend more than you have every month. Instead, use it as a safety net.
Another reason to increase your credit limit is to be able to pay for larger purchases and pay more in the event of an emergency.
A higher limit gives you more flexibility for large purchases and emergency expenses and increases your credit utilization ratio. As long as you pay off your purchases on time, you can build your credit score, which could mean better terms and lower interest rates on future financing.
It’s essential to keep in mind that requesting a credit limit increase could cause a hard inquiry on your credit report. This hard inquiry is a legitimate, authorized pull of your credit report by a service provider or lender. Typically, a hard inquiry may have a minor negative impact on your score in the short-term, and it will stay on your report for two years.
Tips on How To Increase Credit Limit
You can do a few things to try to increase your credit limit. You can start by contacting your current lender for a higher limit through a request online. They may be willing to increase it if you have made on-time payments and have used their services responsibly.
Alternatively, try applying for a new line of credit or loan with another financial institution. If approved, they may offer you a higher credit limit than you currently have.
Making smart financial decisions is the best way to improve your chances of being approved for a higher credit limit.
Use your credit wisely by paying off your balance in full each month and only borrowing what you can afford to repay. These responsible habits will help improve your credit score over time, making it more likely that lenders will approve you for larger amounts of money in the future.
1. Contact Your Credit Card Company
There are several ways to contact your credit card company to request a higher credit limit. Some issuers have an online form a cardholder can fill out and submit, while others require a phone call. Either way, it can be a simple process, but it will require some legwork.
One thing to note: most credit and debit cards display the company phone number on the back of the card. Either find it there or in the “Contact Us” section of your mobile app or online account.
If you have good credit, it may be possible to have your credit limit increased automatically.
However, if you don’t have a good credit history, you may want to consider applying for a new card before asking for an increase. This could help you increase your chances of getting approved for a higher limit.
You should also be prepared to defend your request if necessary. If you’ve always made your monthly payments on time, been responsible with your credit card, or recently increased your income, you should be able to demonstrate your need for a higher credit line.
One downside to requesting a higher credit limit is that it can lower your credit score.
2. Monitor Your Credit Score
If you want to increase your credit limit, keep a close eye on your credit score. In the United States, consumers can request a free credit report from the major credit bureaus (like Experian, Equifax, and TransUnion) every year.
When you ask for additional credit, the credit card issuer will consider several factors when determining whether to approve your requests, such as outstanding credit card debt and on-time payment history.
The better your score, the more likely your request will get approved. However, there are times when your request may get denied, though you can always appeal.
3. Update Your Income Information
The success of your credit limit increase may depend on your income. While updating your income is voluntary, it is a good idea in some circumstances.
If you make less than you earn now, you may receive a lower credit limit, which can hurt your credit score. This is because you will have a higher credit utilization ratio.
Having a higher credit limit means that you can spend more freely. However, it’s a good idea to keep your spending habits in check. Maintain a good credit score to get the best possible loan terms.
Many companies offer online or telephone services to update your income information. The process may differ with each credit card company.
4. Get a Pay Raise
A pay raise can be a major factor when applying for a credit limit increase. A pay increase could demonstrate to lenders that you have a higher level of creditworthiness since you will have more cash flow.
The additional income lets you pay off your credit card before the balance is due, allowing you to keep your credit utilization low.
While increasing your credit limit can give you more spending flexibility, maxing out your card is not recommended. To prevent this problem, consider contacting your credit card issuer to update your income information. This simple act can significantly impact your credit score over time.
5. Apply for a New Credit Card
A higher limit gives you more borrowing power, which is good for your credit score. Many credit card issuers provide information about their credit limits when you apply for a new card. The basis of these limits includes things like your application, employment status, annual income, and credit report.
Remember that applying for new credit will create a hard inquiry on your credit report, affecting your credit score temporarily. Hence, avoiding multiple credit applications at once is a good idea to help protect your score.
Applying for a new credit card limit can also boost your overall spending power. Some cards offer a 0 percent introductory annual percentage rate (APR) period or a rewards bonus.
If you are willing to pay your monthly credit card balance in full, this can help improve your credit history.
What Is the Quickest Way to Increase a Credit Limit?
Contact your credit card issuer on the phone or by email. Generally, you will have to provide some personal information and the reason for the request, and they will evaluate it. Once approved, you can expect to receive a response within a few days or weeks.
A bank or financial institution typically wants to see your credit history for at least six months. If you’ve had a history of paying your bills on time and in full, you’ll have a good chance of being approved.
If you’ve been using your card responsibly and on time, your credit card issuer may automatically allow you to opt-in for a credit line increase.
Having a larger credit limit can boost your credit score. Higher limits will help you make larger purchases, lower your debt-to-credit ratio, and can help improve your credit utilization.
Credit card companies may favor you if your credit utilization is under 30 percent or less than 10 percent.
Which Credit Card Can Offer a Good Credit Limit?
The VITAL Card is unmatched regarding flexibility, valuable features, and a fair credit limit. This cash-back credit card offers 1.5 percent on all purchases and additional rewards for successful sign-up referrals.
The card also provides intelligent, personalized financial tracking tools to monitor and manage your spending.
Sign up for your VITAL Card today.
VITAL Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.