Having access to extra financial resources is made possible by an increased credit limit. Assuming you have a plan for keeping your expenditures in check, that may be a really positive development. Having a greater credit limit is one way to improve your credit score. You can’t discount the possibility that your credit may improve, which will open up many more doors for you to explore in terms of obtaining loans.
The good news is that requesting a higher credit limit is simple, regardless of your motivations. Here’s everything you need to know to have your credit limit raised.
How Can You Raise Your Credit Limit?
There are four simple options available to get a higher credit line. Let’s analyze each in more detail.
Request one from your credit card company online.
You may be able to increase your credit limit by submitting a request to your credit card provider online. You should first browse the available alternatives on any web portal linked with your credit card.
This type of request might be filed under the heading of “credit limit increase” or “line of credit increase.” You might try searching the site if you can’t locate the feature via the menu. Make use of the live chat support to get answers to your questions if it is offered.
You will need to update your personal financial information after you have located the proper request form or connected with a customer chat support specialist. You should be ready to disclose your existing income and the desired increase in your credit limit. Sometimes the lending institution may inquire as to your preference.
Your position and desired outcomes will determine how much of a raise you should request. Let’s pretend you just received a substantial pay increase. Maybe it’s time to ask for a higher credit limit, say, double what it was before to reflect your newfound ability to spend. The best way to prevent a harsh credit pull is to ask for only a little increase (say, 10% to 20%) rather than asking for significantly more.
Contact Your Credit Card Company
You may always phone your credit card company if you can’t locate an online request form or would rather not submit your request electronically. The contact information for your card is located on the back. The majority of credit card issuers have automated systems in place to take calls, but those calls are routed to the right customer support agent. You should justify your request with an explanation.
You may have recently gotten a raise at work or paid off any outstanding debt. If each of these things happens, it might be cause for a credit increase since your financial condition has changed. Be careful to emphasize your responsible card usage thus far.
Increase Your Credit Score or Income to Become Eligible for an Automatic Credit Limit Increase
Credit card companies may increase your limit without your asking. An automatic raise can be granted if they see your credit score has risen. Because a better score indicates a higher degree of responsible credit utilization, it is important to maintain it.
Improving one’s credit score is one way that cardholders may work toward the automatic approval of a higher credit limit. It’s possible to manage this by not applying for too much new credit and always paying your bills on time.
Adding new information about your salary is another method to earn a raise automatically. In most cases, you may do this using your card issuer’s online account management panel. A lot of credit card companies need you to re-verify your annual income. But if your financial situation alters, you may easily adjust your contribution.
Boost Your Security Deposit
An individual’s security deposit on a secured credit card is directly proportional to the card’s credit limit. If you put down a security deposit of $500, for instance, your card’s maximum available credit will probably be $500 as well.
Most of the time, if you put down a larger security deposit, the lender will provide you a higher credit limit. In order to increase your security deposit with some credit card companies, you will need advance approval. On the other hand, if you need to increase your security deposit urgently, you can do it online.
Of course, it may be easier said than done to come up with the additional monies for a larger security deposit. Increasing your savings rate is the first step you should take if you need help saving up for a planned credit limit increase.
How Do Credit Card Companies Determine Your Credit Limit?
Do you have any idea why your credit card provider imposed a restriction on your spending?
Decision-making processes at different credit card companies may not necessarily be identical on the inside. However, these are the main considerations that financial institutions utilize when determining credit limits.
- History of timely payment practices A record of timely payments might enhance your credit limit. If you consistently make late payments, your credit limit might be reduced.
- Credit Rating. Your credit history is reflected in your credit score. A strong credit score results in a greater limit, whereas a bad score results in a lower limit or denial of credit altogether.
- Ratio of credit utilization. A low credit usage ratio demonstrates responsible credit management. When you reduce your utilization ratio, your credit score may increase.
- Employment Status and Earnings. Your annual income is a major factor in determining your credit limit. Ultimately, you cannot have a credit limit that exceeds your salary. If not, how could you repay the lender? Lenders want to ensure that you are not enticed to spend more than you can afford to repay.
- Monthly mortgage or rent payments. The monthly housing payment is a fixed expense that reduces your discretionary income. If your housing expenses are considerable, your credit limit may likely be reduced. Similarly, if your housing expenditures increase following a relocation or rent increase, but your income does not, your credit limit may be reduced.
- How long you’ve been a cardholder. As a reward for being a responsible borrower who consistently pays payments on time, your credit card provider may increase your credit limit.
Your credit limit is based on a number of factors. Your chances of getting that credit line increase from your lender enhance, though, if your financial status has improved recently.
The amount you can borrow is set by your lender. This may suggest that the lender has established a standard credit limit for all cardholders. To get things moving, a starter credit card can have a $500 limit.
What to Do If Your Credit Limit Increase Request Is Rejected
Making a request to have your credit limit raised is easy, but the issuer ultimately decides whether or not you get the increase. If you are not granted the raise, the employer will provide written notification of their decision.
Investigate the causes, which may involve things like your earnings, credit rating, and payment record. No, you should try to fix the problem. Consider making it a priority to pay your bills on time if you have a habit of paying late. And if your current salary isn’t sufficient to warrant a raise, try to find ways to boost it.
Reach out again after you’ve given yourself at least six months to fix the problems. You could have more success this time if you’ve addressed the lender’s issues.
What Are the Advantages of Increasing Your Credit Limit?
Increases in your credit limit may seem to have no effect beyond allowing you to buy more things. After all, with a larger credit limit, you may charge more on your card without going over your limit. Having more money in your account can be justification enough to ask for an increase in your credit limit.
If you look further, you’ll see that increasing your credit limit can also have a positive effect on your rating. Because a lower credit use rate is a key component of most credit scoring models, a greater credit limit is advantageous.
Asking for a higher credit limit is a straightforward process. Consider the potential hit to your credit score if you decide to make a request. It shouldn’t be too tough to have your credit limit raised if you’ve been good about managing it. And that’s especially true if your salary is growing.
However, increasing your credit limit may be tough if you have a history of credit card mismanagement. In that scenario, you should work on raising your credit score before applying again.