Having your credit limit increased feels a little like getting a promotion or raise on your job. Ok, maybe it’s not that monumental, but it’s still a pretty big moment in your credit card’s life. An increase in your credit limit feels like sort of a pat on the back to let you know that you’ve been doing things right with your credit card.
A bigger credit limit increases your purchasing power, but that’s not the only great thing about a bigger credit limit. A higher credit limit can mean good things for your credit score – as long as you don’t go right out and use up your newly available credit. Thirty percent of your credit score is based on your level of debt. A major part of that is your credit utilization or the amount of available credit you’re using. A credit limit increase lowers your credit utilization and can result in a higher credit score.
So, how do you get a credit limit increase? It’s not a very complicated process.
Automatic Credit Limit Increase
Some credit card issuers will increase your credit limit automatically as you demonstrate you can handle credit responsibly. That means charging only a percentage of your total credit limit and making your payments on time each month. Many credit card issuers review accounts periodically and automatically raise the credit limit for cardholders who meet their criteria.
Requesting an Increase From Your Card Issuer
With some credit cards, however, you have to ask for a credit limit increase by calling the number on the back of your credit card. Listen to the prompts; there may be one for requesting a credit limit increase. Or, just choose the option to speak to a customer service representative and ask for an increased credit limit. You may also be able to request a credit limit increase online.
When you request a credit limit increase, the card issuer may ask for some information to process your request. For example, they may ask for your monthly income, how much you’d like to have your limit increased, and the reason for the increase.
To process your request, the credit card issuer may access your credit report via a hard or soft pull depending on the credit card issuer. A soft pull or inquiry won’t affect your credit score; these are the types of inquiries that appear only on your version of your credit report. However, a hard pull can affect your credit score depending on the other information present on your credit report. The hard inquiry will show up on all versions of your credit report for up to two years.
You may find out instantly if your request for a bigger credit limit is approved. Otherwise, the card issuer will notify you a few days later, usually via mail.
Credit Limit Increase Denied
You’ll get an adverse action letter if your credit limit increase request is denied because of something on your credit report. You’ll also get a free credit score disclosure if your credit score was used in the decision to decline your request. For example, your request may be denied if you've had recent delinquencies on other credit accounts or if your credit card balances are high relative to the credit limit.
If your request isn’t approved this time, take note of the reason(s) listed in the adverse action letter. Improve your credit in those areas, wait a few months, and then try again.
Beware Credit Limit Increase Fees
Beware that some credit cards charge a fee to increase your credit limit. The Credit One Bank Visa Platinum credit card, for example, charges up to $49 when you request a credit limit increase. And the First Premier Bank card charges 25% of the increase each time you’re approved for a credit limit increase. Note that both these cards cater to people with bad credit. If you have one of these, or a similar card, skip the potential for credit limit increase and move to a better credit card as soon as you qualify.