If you’re looking to increase your credit limit, you’ll need to follow a few key steps. In this blog post, we’ll lay out how to ask for a credit limit increase from your issuer. By following these steps, you’ll be in a much better position to get the increase you’re looking for.
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Check your credit report
The first step is to check your credit report from all three credit bureaus — Experian®, Equifax® and TransUnion®. You’re entitled to one free credit report from each bureau every 12 months at AnnualCreditReport.com. Review your reports carefully to make sure there are no errors that could drag down your score, such as a mistake in your name, address, Social Security number or date of birth. If you see anything that looks wrong, dispute the error with the credit bureau.
Next, take a close look at your credit utilization ratio, which is the percentage of your available credit you’re currently using. If you have a $10,000 credit limit and you’re carrying a balance of $5,000, for example, your credit utilization ratio is 50%. The lower this number is, the better — but ideally, you want to keep it below 30%. Carrying a high balance relative to your credit limit can hurt your score.
If you have a good history of making on-time payments and keeping your balances low relative to your credit limits (in other words, if you’ve managed your accounts responsibly), there’s a good chance you’ll be approved for a higher limit when you request one.
Consider why you want a credit limit increase
“Before you request a credit limit increase, really think about why you want one,” Fix says. “A credit limit increase can be a good thing if you’re using credit responsibly and trying to improve your credit score. But if you’re already struggling with debt, a credit limit increase can make things worse.”
If you decide that a credit limit increase is the right move for you, there are a few different ways to request one.
Decide when to ask
Before you make the call, it’s important to decide when the best time is to ask for your credit limit increase. One key indicator is how long you’ve been a customer with the credit card issuer. Generally, the longer you’ve been a customer in good standing, the more likely you are to be approved for a credit limit increase.
If you have a history of late payments or other negative marks on your account, you may want to wait until those marks fall off your credit report (after seven years) before requesting a credit limit increase. You should also make sure your credit utilization ratio — the amount of debt you have relative to your credit limit — is below 30%, which is considered optimal. Otherwise, a higher credit limit may not do much to improve your credit score.
How to ask for a credit limit increase
If you’re responsible with your credit and you pay your bill on time every month, you may be ready for a credit limit increase. Asking for a credit limit increase is a straightforward process, but there are a few things you should keep in mind before making the call.
First, take a look at your current credit limit and ask yourself if an increase would be beneficial. If you regularly carry a balance on your card or if you anticipate making a large purchase in the near future, an increased credit limit could help you avoid fees associated with going over your limit. However, if you don’t think you’ll need the extra credit, it may not be worth the inquiry on your credit report that comes with requesting an increase.
When you’re ready to request an increase, call customer service and ask to speak to someone about increasing your credit limit. Be prepared to provide information about your current financial situation and how much additional credit you’re requesting. If the representative asks why you want the increase, be honest but brief. For example, you might say that you’d like to avoid fees associated with going over your limit or that you’re planning to make a large purchase in the near future.
If the representative needs more information, they may ask about your employment status, income, and current debt load. They may also pull your credit report to review your account history. Once they have all the information they need, they’ll let you know whether or not your request has been approved.
In most cases, you’ll receive an instant decision about whether or not your request has been approved. However, in some cases, the representative may need to escalate your request to a supervisor or someone else within the company. If this happens, they’ll let you know when you can expect to hear back about a decision on your request.
Asking for a credit limit increase is generally a quick and easy process as long as you’re prepared with some basic information about your finances. Keep in mind that requesting an increase will result in an inquiry on your credit report, so it’s important to only make the request when it makes financial sense for you to do so.
After you receive a credit limit increase
If your credit limit is increased, your credit utilization ratio will decrease, which can have a positive impact on your credit score. You may also have access to more funds in the event of an emergency.
To avoid negative consequences, make sure you don’t spend any more than you can afford to pay off each month. If you do carry a balance, try to pay it off as quickly as possible to minimize interest charges.