How to Increase Your Credit Limit

You’ve probably heard that your credit limit is important. But what exactly is it? And how can you increase it?

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Review your credit report

One of the best ways to find out why your credit limit is low is to review your credit report. You can get a free copy of your credit report from each of the three major credit bureaus every year.

Order a free copy of your credit report

You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.

Checking your own credit report will not hurt your credit score.

Review your credit report for errors

It’s important to review your credit report regularly to make sure there are no errors that could be negatively impacting your score. If you find an error, you can file a dispute with the credit bureau to have it removed. You can get a free copy of your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once per year at AnnualCreditReport.com.

Increase your credit limit

You can increase your credit limit by requesting a credit limit increase from your credit card issuer, using a credit card that offers automatic credit limit increases, or by becoming an authorized user on someone else’s credit card. We’ll go over each of these options in more detail so you can choose the best method for you.

Call your credit card issuer

One way to potentially increase your credit limit is to simply call your credit card issuer and request a higher limit. If you have a history of making on-time payments and your credit score has improved since you opened your account, the issuer may be willing to give you a higher limit.

When you call, be sure to have your account information handy so the customer service representative can pull up your account quickly. Be prepared to answer questions about your income, employment and housing situation. The representative may also ask for your permission to run a hard inquiry on your credit report, which could temporarily lower your credit score by a few points.

Request a credit limit increase

If you have a good payment history with your credit card company, you can request a credit limit increase. This can be done by calling customer service or logging into your account online. When you request a credit limit increase, the credit card company will typically do a hard pull of your credit report, which can temporarily lower your credit score by a few points. If you are approved for a credit limit increase, it will usually take effect within one or two billing cycles.

Negotiate a higher credit limit

If you’ve had your credit card for a while and have always made your payments on time, you may be able to get a higher credit limit. Simply call your credit card issuer and ask to speak to someone about increasing your limit.

When you make your request, be sure to emphasize how long you’ve been a customer and how responsible you have been with making your payments on time. If you’re asked why you want a higher limit, be honest but brief in your response. For example, you might say that you’d like to have a little more financial flexibility in case of an emergency.

credit card issuer will likely do a hard pull of your credit report as part of their decision-making process. If you’re rejected, don’t despair — there are still other options available to help increase your credit line.

Use your credit limit wisely

Your credit limit is the maximum amount of money that your credit card issuer will allow you to spend in a day, month, or billing cycle. You can use your credit limit to your advantage by using it to improve your credit score and keep your balances low. Here are a few tips on how to increase your credit limit.

Keep your credit utilization low

The best way to use your credit limit is to keep your credit utilization low. This means using less than 30% of your total credit limit. For example, if you have a credit limit of $1,000, you should aim to use no more than $300 of that. Keeping your credit utilization low is one of the most important factors in maintaining a good credit score. It shows creditors that you’re a responsible borrower and can manage your debts.

Pay your bills on time

Paying your bills on time is one of the most important factor in maintaining a good credit score. More importantly, it shows financial responsibility to potential lenders, which can help you qualify for a higher credit limit. If you have difficulty remembering to pay your bills on time, consider setting up automatic payments from your checking account.

Monitor your credit report for changes

You can monitor your credit report for changes by requesting a free copy of your report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion) every four months. You can also set up free alerts with each credit reporting agency to notify you whenever there is a change to your report.