5 Tips on How to Increase Your Credit Limit
A higher spending limit on your credit card not only plays a key role in your financial well-being, it’s also a great way to increase your credit score. A better credit score means it’s easier for you to qualify for mortgages and loans; you’ll also worry less about going over-budget.
Ready to boost your card’s credit limit? These five tips can help you manage this feat.
Don’t ask for too much.
Credit card companies usually review your credit within six months of your membership. If you pass the qualifications, you’ll most likely receive an offer for a credit limit increase. Should the call not come through after six months, you may call the credit card company to issue a request. Stick to reasonable figures – a 10 to 25 percent increase is fine.
It’s not a wise idea to ask for a credit limit increase before your sixth month of membership, though, nor is asking for double your credit limit. These are red flags that may lead to instant denial of your request and might reflect badly on your record with the credit card company.
Use your card frequently.
Convince your credit card issuer that you deserve a higher credit limit by using your card for most, if not all, of your transactions and use cash in paying back the card balance. Putting a lot on your card and paying back your bills on time shows that you need access to a bigger money pool and that you can handle it properly.
Show you’re a good customer.
Once you make that call to request for a credit limit increase, you may want to remind your issuer that you’re a loyal customer. A solid payment history, with higher payments than the minimum, also shows that you’re a responsible credit card owner and can handle a larger limit.
You can also build your case by providing practical reasons on wanting to increase your credit limit. For example, you want to start paying more bills with your card and thus need the increased limit.
Limit your request to your best card.
Do you have multiple credit cards? Don’t request for limit increases for all of them at the same time. When you ask for a limit increase, your credit card issuer gets a copy of your credit report. Should they see multiple “hits” of the same request from other issuers, it may not send a good signal. You may come off as desperate; some companies might also flag this as suspicious activity.
Focus on your best credit card and make a strong case for your credit limit increase. Should they decline, wait another two to three months before making another request with a different card issuer.
Wait for automatic increases.
This is the easiest way to increase your credit limit, as you don’t have to do or apply for anything. Credit card issuers regularly conduct reviews on their customers’ accounts to see if anyone “deserves” a credit limit increase. If you’re qualified, you’ll immediately receive notice for a credit limit increase.
These automatic increases usually happen to accounts with lower credit limits. If you already have a substantial credit limit, you may have to send a formal request for a further increase.
Having a bigger credit allowance on your credit card is definitely an advantage on several fronts. However, before you make a request for a higher spending limit, make sure you’re doing it for the right reasons. Evaluate your spending habits and paying capacity, and make your move as you see fit.