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The 10-Second Credit Limit Increase

I logged into my Citi credit card account online today to make some changes to my profile when I decided to try to get an automatic credit line increase. I figured I was already logged in doing other things, a few button clicks to see if I could increase the limit certainly wasn’t going to cost me much time. I swung up to Tools & Services and click on Request a Credit Line Increase. If you recently did this, the option won’t be there.

I clicked on it and this is what appeared:

So, Citi card holders, this is your semi-annual reminder to try increasing the credit limit on your credit cards. Citi’s great about this because they let you do it all online and oftentimes without a credit check (as they explicitly tell you that a credit bureau report was not pulled).

Benefits of a Credit Increase

Credit utilization [3] is one of the more significant factors in your credit score. Take your credit card balances at the end of the month, divide by your total credit limit – that’s your utilization. By increasing your total amount of credit, you decrease your utilization and increase your attractiveness to lenders.

You also give yourself a larger line of unsecured credit that, should things turn south, you can tap to bridge the gap. While it’s better to fund and then draw down an emergency fund, having unsecured credit is better than having no money at all. Sometimes life presents you the choice between two evils. This reason actually dovetails nicely with one of the current drawbacks of getting a large line of credit.

Drawbacks of a Credit Increase

Some issuers are now looking at your total credit limit as a risk factor and may reject you for a new card because of this. This is a fairly recent development because a few years ago this was never a concern (which probably contributed to the economic situation we’re in today!). Since your personal finances can very quickly take a turn for the worst in this economy, many credit card companies are probably wary about extending credit to someone who already has a lot. In the past, they didn’t care as much because they expected you to replace an existing card with their card.

That being said, since I don’t anticipate applying for another credit card, I went ahead and requested a CLI. As I said before in my tutorial walkthrough on CLIs with Citi [4], if they start asking for detailed information… walk away. Detailed information means a hard inquiry and a hard inquiry is bad.

For other strategies you can use to boost your limit, read this post on how to increase your credit limit [5].