Requesting Credit Line Increases
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Every six months or so (I just do it whenever I remember), I pop into a few of my accounts and request a credit line increase. Why? I know that I don’t need the additional credit but I still ask for it because now is when they’re most likely to grant me a credit line increase. Banks usually won’t give you money when you actually need it, it’s a paradox! Well, most credit card companies will not entertain the notion of an increase within the first six or first twelve months because they’ve given you all they’re comfortable with and won’t even consider increasing it… yet. If you even try requesting one from a newly minted card, you’ll be greeted with a message to come back later. But, after you leave credit limit purgatory… the sky’s the limit and you should try to soar.
Once you’ve made it out of the no-increase period, requesting an increase is easier at some companies than others. Citi and American Express will both allow you to increase your credit line entirely online whereas Discover will force you to call their 800 number and talk to a human being. Now, when you go to request an increase, prior to entering any information, the company may offer you a small increase. This isn’t meant to placate you, this is because they planned on increasing it some amount in the near future and since you asked, they’ll just give it to you now. I always accept this increase because it comes without any pull of your credit history.
If they don’t offer that, they will request some income and debt information, then respond in 2-4 weeks after a human being reviews the information. The information they usually will request are:
- Amount of increase
- Current employer and time with the employer
- Current income
- Current rent/mortgage payment and time at the residence
Are there drawbacks to requesting credit line increases? I don’t think so because the limited liability in effect on every one of my cards (which everyone should have on their credit cards) makes it difficult to be screwed as a result of a higher limit.
What are the benefits? Well, your credit utilization percentage will go down because your total credit limit is higher; so we’re talking a small increase in your credit score. If you enter in your information though and it requires a pull of your credit, this would be counter-productive. I usually won’t enter information if prompted for this very reason – I don’t need the extra credit, so why take the marginal hit on my credit for it?
Anyone have any thoughts on this, good or bad?
{ 15 comments, please add your thoughts now! }
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Oct 26, 2006 | Read more in Credit, Debt
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I completely agree with this philosophy.
I’m four years into my mortgage and not looking at the prospect of buying a new car for another 5 years or so, so I’m using this opportunity to go on an unsecured credit aquisition binge for me and my wife at the rate of a new card every 3-6 months.
We’re not going to use any of it, we just want to get them now while the opportunity cost is low and our scores will have time to recover.
By the time we need another loan, we’ll have a huge amount of decently-aged new credit, a few old “keeper” accounts (credit union VISA, AMEX, etc) low utilization, and years of perfect payment history.
I’ve read that high credit limits/available credit could affect your credit score, even if you have no outstanding balance: i.e., the *potential* that you could rack up a huge balance given your high approved credit line scares other lenders.
@Cleophus:
My understanding is that skittishness is typically a function of the age of the accounts, hence the average account age penalty. But I’m not a lender, just a guy with some credit cards.
I have heard people say that high credit limit will affect your credit score. However, I don’t buy that. “The potential” that you could spend huge amounts doesn’t look like a valid point to reduce someone’s credit score especially if that someone has a spotless credit history to date.
Tough higher credit limit doesn’t harm your credit score, it is possible that some mortgage lenders get nervous looking at your credit limit (I don’t know why they would…but they do it anyways). So people who are looking for mortgage should dig a bit deeper into this before going all out on increasing credit limits.
Personally, I like to see high credit limits…not because I use any of those but just for my ego satisfaction purposes
. Typically I use like 3% of my credit limit but it has only improved my credit score over the years.
I also thought that having too many high limit credit cards could hurt your score. My understanding is that there is a happy medium, enough but not too much. Where that is is anyone’s guess!
Too bad FICO’s (and others’) algorithm for coming up with a person’s credit score is proprietary
, or we could have an objective anwer to this!
I disagree with this! Anyone who is trying to get debt under control should not be increasing their capacity to borrow! That is like an alcoholic buying and storing bottles of vodka because they’re on sale.
Bubbers, I’m pretty sure he’s not advocating that someone increase their credit when they already have problems living within their means.
Your analogy of the alcoholic works the other way as well. If someone who rarely drinks sees vodka on sale 6 months before a party they are planning, wouldn’t it be in their best interest to buy it then?
@Bubbers:
If a person has fiscal self-control, any strategy that raises their credit score increases their ability to get debt under control by lowering APRs, which can lead to quicker principal repayment. Also, the credit card issuers are more likely to throw out some of those nice no-fee 0% APR for 12 month checks to lure them back in. Used properly, they can be a powerful tool.
Citibank and American Express are cool in that you may get instant credit line increase through their website. If you get the long form that requires a hard-pull then its probably not worth it. Especially if you are planning to apply for new credit cards I would hold off on the request for credit line increase since creditors might see it as too many inquiries and decline your applications.
Savvy,
Your comments really helped me much. Two weeks back I called Amex to verify whether my credit will be affected if I request for a line increase, he said yes. Then I kept quite.
But as you mentioned I tried myself online, never came up with anything line of pulling the credit file, so submitted and instantly credit line is increased. thanks a bunch.
cheers
Hi! I have an American Express credit card. When I applied that credit card, I just have 2000 credit. I have been using that credit card for about 5-6 months. Since I am planning to let my family members to use my credit card, i requested an increase of my credit limit for like 3 times for the past few months. But, they all got denied. My question is that if I request an increase of credit too often, will that hurt my credit score? Thankz!
Each one of those requests will likely include a credit request which will negatively affect your score.
Do you guys know what can be max limit for a credit card limit? 30k? 50k? or even more?
Secondly, I have score better than 800, how much my score decrease if I apply a new credit card?
It will probably go down a few points because of the inquiry, as for the limit, I don’t know what the limit is on one card but it would be difficult to get a card with a limit as high as $30k.