Buzz
Increasing your credit limit can be quite advantageous. It can boost your credit score by reducing your credit utilization ratio, while also offering greater flexibility and purchasing power. However, automatic credit limit increases don’t happen on their own—you must reach out to your credit card issuer for a request. Fortunately, the process is fairly straightforward. Many banks allow you to make the request online, so you won't need to spend time on the phone with customer service.
How to Increase Your Credit Limit
If you wish to increase your credit limit, start by reviewing your credit score and report. Ensure that there are no errors or negative marks that could be lowering your score before requesting the increase. Lenders will assess your credit when processing the request, and a higher score can improve your chances. Also, make sure you're up to date with your payments, as timely payments reflect positively on your reliability.
Determine your credit utilization ratio. This is calculated by dividing the total of all your balances by the total credit limits of your cards. If your ratio is under 30%, you're doing well. However, if you regularly exceed that threshold, it may indicate that a higher limit could be beneficial. Be sure to mention this in your request to your issuer.
Next, decide how much of a credit increase to ask for. There are no strict guidelines, but generally, asking for an increase between 25-50% of your current limit is reasonable. Avoid requesting a massive increase, such as doubling or tripling your limit, as this could result in a denial.
Ways to Secure a Higher Credit Limit
Contact your card issuer. Explain why you're deserving of a higher limit and be prepared to share financial details like income, assets, and expenses if required.
Submit a request online. Don’t feel like dealing with a customer service representative? I understand. You should be able to submit your request through your card’s online portal. Just ensure your profile details, such as income information, are up to date before you submit your request.
If you're finding your requests aren't yielding results, you might want to think about switching to a new card with a higher credit limit. A higher limit offers greater flexibility and can help boost your credit score. However, remember that this isn't an excuse to accumulate more debt. Rather, use that higher limit to maintain a healthy credit utilization ratio and continue making your payments on time.
