If you’ve been following our blog for any time, you know we are a big advocate for repairing your credit. A good credit score can open up so many doors for you – including the ability to get a higher credit limit on your credit card. Today, we will show you how to get your credit limit increase request approved. So, whether you’re looking to make a big purchase or want some peace of mind knowing that your limit is high enough to cover an unexpected expense, keep reading!
What is a Credit Card Limit?
A credit card limit is a maximum amount you can spend on your card. Every transaction made uses up part of your credit card limit. The remaining available balance after a purchase is your limit minus the purchase total. Interest and fees charged also reduce your credit card limit.
What Determines a Card Limit?
Your card issuer sets credit limits. Various factors are reviewed to determine your credit card limit. Banks will confirm your annual income. They will also pull your credit reports to check the following:
- Account History – How long have you had your current accounts? What types of accounts are they? Have you applied for a bunch of new credit recently?
- Credit Utilization Ratio – What is the total amount of debt owed? What percentage of your credit limits are you using?
- Payment History – Do you repay your debts on a timely basis? Do you have a bankruptcy filing record or had past-due debt sent to collections?
Can You Exceed a Credit Card Limit?
If you exceed your limit, your bank or credit card company may decline the transaction. Some card companies allow you to exceed your credit limit, but they typically charge an over-limit fee that might be expensive. There may be additional consequences, such as a decreased credit limit or a higher minimum monthly payment until your balance is the limit threshold.
Requesting a Higher Limit
Now that you know what a credit card limit is and some things that go into consideration when setting the initial limit, let’s discuss how to request a limit increase. Card issuers don’t always increase your credit line automatically. Therefore, if you want a higher credit limit, you must be proactive. This means contacting your card issuer and explaining why you need an increase is warranted.
Sound daunting? Don’t worry; we have your back. We’ve prepared an extensive checklist to give you the best chances of receiving a credit card limit increase. Read on to learn more.
Know Why A Credit Card Limit is Needed
It’s a good idea to check your credit report before requesting an increase so that you know what you’re getting into. A higher credit line might be dangerous, so make sure your reasons for wanting more are valid. While a bigger limit may improve your credit utilization ratio and thereby raise your credit score, it gives you more room to spend and can push you deeper into debt.
It’s always best to spend responsibly and within your means. Just because a higher credit limit may allow you to buy that pair of shows you’ve been eyeing doesn’t mean that asking for a higher limit is the best solution for you. It’s never a good idea to ask for more credit on an impulse buy – make sure your reasoning is sound and justified. Most importantly, you can repay the debt you’ll incur.
Review Your Credit History
If you ask for a boost in your credit limit, your card issuer may perform a hard inquiry to see if you qualify. This may have an impact on your credit scores. It’s important to note a hard query appears on your credit reports for two years and might reduce your credit score.
Hard inquiries significantly impact your credit scores if you have just a few accounts or no credit history. That’s why, before requesting a credit limit, especially if you anticipate additional hard inquiries from any other credit applications, it’s essential to understand your credit history.
Gather Documentation Needed
Your card company may request information about your present yearly wages, employment status, and how much you spend on housing each month. Have that information prepared before you call.
That’s correct; we said call. You may sometimes obtain a credit line raise by filling out an application on your card issuer’s website, but you’ll have a greater chance of learning more if you contact a representative over the phone.
Make Your Case
When asking for a credit card limit increase, keep it basic. Make the request straightforward. Be courteous and calmly explain why an increase is being requested. Finally, if you are not approved, know why. This allows you to work on developing a better-positioned scenario where you’re more likely to be approved.
Be Smart
So, should you ask for a credit card limit increase? It depends on your goals and how disciplined you think you can be about using the extra credit. Keep in mind that if you do get a higher limit, it’s essential to keep your utilization rate low and make timely payments to continue seeing improvements in your scores. But beware—if you can’t resist the temptation to spend more when plastic is readily available, a higher limit could lead to even more credit card debt.
At Credit Card Chest, we want to help you make the most of your financial situation. We offer several credit score monitoring products to help you understand where you stand and what steps need to be taken to achieve your goals. We look forward to helping you obtain a healthy financial future
