Chanelle Bessette
Getting a higher credit limit on your credit card can be helpful or harmful, depending on how financially stable you are. If you can pay your credit card bill in full and on time every month, increasing your credit limit can give you more flexibility and potentially improve your credit score by lowering your credit utilization ratio. But if overspending is a problem for you, a higher credit limit may not be a good idea.
Here are four ways to increase your credit limit, plus tips on how to know whether a credit limit increase is right for you.
How to get a higher credit limit
- Make a request online. Many credit card issuers allow their cardholders to ask for a credit limit increase online. Sign in to your account and look for an option to submit a request. You may have to update your income information. A higher income may indicate that you have greater financial security, which issuers may consider while evaluating your request.
- Call your card issuer. Call the number on the back of your card and ask a customer service representative whether you’re eligible for a higher credit limit. The rep may ask about the reason for your request, as well as whether your income has gone up recently.
- Look for automatic increases. Some companies give cardholders an automatic credit limit increase when they’ve had the card for a while and have been using it responsibly. Your issuer must get your permission before increasing your credit limit.
- Apply for a new card. If you’ve been good about making on-time payments with the lines of credit you already have, and your credit is in good shape, you could be approved for a new credit card. Even if the new card’s limit isn’t higher than your current one, having an additional card still increases your overall available credit.
How a higher credit limit can help you
If you’re a responsible cardholder with good or excellent credit, a higher limit can boost your credit by keeping your utilization ratio low. Credit utilization, or the amount of your available credit in use, is a major factor in your credit scores. Low utilization is a sign that you’re living well within your means, while high utilization suggests the opposite.
Spending most or all of your available credit every month — even if you pay off your balances — can damage your scores. The general rule of thumb for good credit utilization is to use 35% or less of your limit, both on each card and overall.
“If you’re a responsible cardholder, a higher credit limit can help boost your credit score by helping keep your credit utilization low.”
Increasing your credit limit can be a strategic move after you’ve started earning more money, as your finances will have more flexibility. Say you typically charge $500 per month on your credit card, and your credit limit is $1,000. Your credit utilization is 50%, which is above the recommended 35%. If your limit goes up to $5,000 and you still spend the same $500 a month, your utilization drops to 10%, which can help your credit.
Increasing your credit limit can also prevent you from being charged an over-the-limit fee. However, if you’re frequently spending more than your credit limit, your problem might not be the limit — it could be that you’re overspending and not monitoring your balance correctly. If that’s the case, ask your issuer if they can stop any transactions that will push you over the limit. It’s your responsibility, not the issuer’s, to ensure that you stay within your credit limit.
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Think carefully before requesting a higher credit limit
Even if you’re sure you can get a higher credit limit, evaluate your reasons for wanting one before you make the request. If you’re looking for flexibility or lower utilization, go for it. But if you need more credit because you’re in a consistent state of financial emergency, a higher credit limit is unlikely to solve your cash flow problem — and could even make it worse. Before you request a higher limit, also consider that:
- Timing is everything. There are better and worse times to request an increase. Generally speaking, it’s a good idea to wait until you’ve gotten a pay raise, have good credit or have a track record of being a responsible cardholder with your issuer. If, on the other hand, your income has dropped, you’ve applied for other lines of credit or your credit isn’t in the best shape, you may want to wait before asking for more wiggle room on your credit line.
- It might ding your credit score. A request to raise your credit limit could initiate a hard inquiry on your credit report, which can knock points off your score, especially if you’ve already applied for other lines of credit in the past year.
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