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How to Increase Your Credit Limit

If a recent Your Take post on credit card credit limits [3] 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 [4]). 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 [5] 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 [6], 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 [7] 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 [8]. 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 [3] that the Citi mtvU card [9] 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 [10])