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How to Increase Your Credit Limit
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If a recent Your Take post on credit card credit limits is any indication, there’s no secret to getting a higher credit limit on your card. I thought I was high with a near $70,000 credit limit but plenty of people had total unsecured credit limits in the $60,000 – $100,000 range. While it wasn’t a scientific survey, I wouldn’t surprised to read that, in general, unsecured credit limits are much higher than people expect.
That being said, I think a good way for a consumer to protect themselves from the somewhat unpredictable credit score system is by increase their credit limits as much as possible without increasing how many credit cards they have.
Why Increase Your Limit?
The most obvious reason is for credit score purposes (how FICO scores work). Credit utilization, the percentage of available credit that you are currently using, is a factor in your credit score. By increasing your total credit limit, you can reduce the utilization figure and give your score a boost. It is important that you do this without increasing the number of accounts because new applications result in hard inquiries, which damage your score.
This tactic is even more important today because since the recent credit card bill was passed, a lot of credit card issuers have begun to change their card programs and policies. Citi recently introduced an annual fee for cardholders that spent under a certain threshold, which has led some to consider canceling their cards. In response to these changes, I gave some recommendations on what you could do to limit the damage canceling a credit card would have on your credit score, one of which was to increase your credit limits.
Now, the tips:
1. Be Patient
Credit cards will not increase your credit limit until you’ve had the card for six months. They want to have at least six months worth of spending and payment data before they’ll even consider raising your credit limit. For those six months, you’ll want to be a model citizen by always paying on-time, never exceeding your credit limit, and follow the other terms & conditions of the card. While it’s good to behave this way all the time, it’s especially important within the first six months if you want to increase the limit.
2. Use The Card
During those six months, you’ll have to use the card to show responsible behavior. Put yourself in the shoes of the credit card company, why increase your limit if you hardly use the card? If the card is only for emergencies, why would we want to give more credit to someone who would only use it in an emergency? Regular use and regular payment also has a beneficial effect on your credit score, which will factor into the decision.
3. Ask Online
Some issuers, like Citi, will give you an automatic credit limit increase through an automated system online. This is a quick and easy way to get your credit limit increased without an inquiry. If the issuer asks for more detailed information, such as salary and employer, you won’t want to continue because they will put a hard inquiry on your account.
4. Call and Ask
If the issuer doesn’t have an online request form, your best option is to call and ask them for the procedure for a credit limit increase. They will usually be able to tell you want you need to do to get a credit limit increase. If you request a credit limit increase on the phone, be sure to ask the CSR if a credit check is required. If a credit check is required, you do not want to request the increase because it they will make a hard inquiry on your credit report. The hard inquiry will hurt your score, so you will want to avoid it. If a hard inquiry is not required, then you’ll want to proceed.
5. Wait and Repeat
Once you’ve successfully increase your limit, you’ll want to continue as normal and request an increase in a few months (I usually wait six months). This is easiest when you have an issuer with an online request system because you can try ever few months and simply ignore it if they ask for more information. I routinely get increases without a credit pull. I posted in the Your Take article that the Citi mtvU card had a $9,600 limit, it currently has a $11,600 – all without a credit check.
Do you have any tips for increasing your credit limit?
(Photo: Andres Rueda)
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I have found that asking every several months either online or on the phone usually results in an increase. Then again, you have to maintain a good history with the credit card company. If you call in, I recommend asking for a rate reduction at the same time. So even if you don’t get the credit line increase, you may still walk away with a lower rate.
A credit limit increase can be very useful. You just have to make sure you continue to observe the rules of responsible use and try to avoid carrying a balance.
Great tips Jim! One caveat I would add to requesting a credit limit increase online is that online systems tend to use some sort of algorithm to determine if you’re eligible for a credit limit increase. And with any algorithm comes limitations.
This just happened to me this month when I asked Chase for a credit limit increase online. Even though I have excellent credit and a flawless payment history, there was something on my credit report that made the system turn me down. But when I called to follow up, the CR was able to grant me the increase. Further proof that computers can’t match a human brain… quite yet! Lesson: If your online request proves fruitless, try phoning your bank and talking to a human being.
It might be necessary to work to increase credit limits just to cover the ground lost to banks cutting limits.
Sounds almost tongue-in-cheek, but it’s really the way it is out there right now.
I don’t know how effective it would be in this current market, but I’ve gotten the biggest increases over the years by opening a second card with the same bank and then consolidating accounts. Using this method I’ve been able to double or triple my credit limits with little effort. Of course if you are looking to avoid the credit hit, then you may not want to use this method, but if you can afford the dip in score, I don’t know of a better way to turn two 10k lines into one 20k.
The same thing happens with my mtvU card too.
It’s easy to do every couple of months.
I have a question as I was planning on calling my credit cards’ soon to increase credit limits. I was just reading a quick statement in some retirement guide and it stated that creditors can look at your total credit and think that you have too much available. However the article failed to mention the increase in your credit score (which is important to me). Is is possible to have “too” much of a credit limit?
I never really thought this to be an issue unless you are actually using all your credit limit not that you just have it available (though it could be used and I could see the problem there). So essentially my question is focused on if this is possible (to have too much) and if so how much is too much?
I only have $20,000 and my wife is around the same. I was planning on doing this anyways since I have a long way to go in comparison with others but just curious your thoughts on this.
Great article Jim! Very clear and helpful as I’m preparing to do this!
I’ve never had to ask for a limit increase. Just before the market crashed last year I cut up and canceled $100,000 in credit cards. I couldn’t believe I was left to have that much credit . The bank I deal with gave me 2 at $15,000 a piece. They knew what my pay checks looked like and where and how I spent my money. Good thing I have restraint. I know it hurt my credit rating when I canceled 6 cards but it couldn’t have been that bad cause I bought a new car a couple months later. Got a great interest rate and they said I qualified to buy a much more expensive car. In my experience, if you pay on time and more than the minimum payment, they automatically up your limit. What made me look at my card limits was I got turned down for a mortgage refinance because I had so much available credit.
Nice tips, I always found you got automatic increases right after zeroing out a balance . . . without asking.