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How to Get a Higher Credit Limit
By Bianca Rodríguez Rojas MONEY RESEARCH COLLECTIVE
A credit limit is the maximum amount lenders allow you to spend on a credit card or other lines of credit. The higher your available credit limit, the more purchasing power you’ll have , which can help you cover emergency expenses or pay for large purchases upfront.
Your credit limit is determined when you open your account, but it’s possible to get a higher credit limit down the line. Lenders might increase your credit limit without you taking any action. However, just because your credit card issuer hasn’t offered an increase doesn’t mean you aren’t eligible for one.
Read on to learn what steps you can take to get a higher credit limit.
Step-By-Step Guide to Get a Higher Credit Limit
1. Check your credit report
Before you request a credit limit increase, check your credit reports to verify that your information is correct and up-to-date.
You can request a free credit report weekly from each of the major credit bureaus (Equifax, Experian and TransUnion) through AnnualCreditReport.com. Verify each section of your report carefully for any negative marks you don’t recognize and inaccurate information.
If there are any errors, you should dispute the items immediately. Once you do, credit bureaus are required by law to investigate and eliminate inaccurate information within 30 days of your dispute.
2. Analyze your credit usage
It’s important to evaluate your credit utilization ratio (how much of your available credit you’re using at any given time) since lenders consider it when deciding if to increase your credit limit.
If your credit utilization ratio is above 30%, it’s best to pay down your debt before requesting a credit increase. Individuals with a ratio at or under 30% have a better chance of getting approved for an increase.
3. Provide documentation
Lenders may ask you to provide income and employment information. For this, you can use a W-2 Form or recent pay stubs as evidence.
4. Consider your timing
To increase your chances of getting approved, wait at least six months after opening an account to request an increase. You should also avoid requesting an increase if your current outstanding balances are high or your credit utilization ratio is above 30%.
5. Request the credit limit increase
Once you’ve done the steps outlined above here’s how to request a credit limit increase:
Apply online or through the mobile app
Cardholders can usually request a credit limit increase right on the credit card company’s website. Just log in to your account and search for a button or tab that directs you to the credit increase request page.
Each lender will have its own process, but you typically have to fill out a form where you must include your current employment status, income information and housing costs. Make sure to fill out all the fields, to provide the lender as much information for it to evaluate your request quickly.
It’s possible you’ll get approved immediately, but also be prepared to wait a few days for approval. Your issuer might respond to your request through email, letter or online account.
Call customer service
You can also request a credit card limit increase by calling the phone number on the back of your card. Similar to the online option, you’ll likely be asked to provide information about your financial standing as well. The representative might also ask why you’re requesting additional credit, so be prepared to answer.
Accept an increase offer or update your account
Sometimes lenders evaluate your account and decide to offer you a limit increase based on your account history. Making consistent on-time payments or paying your balance in full every month shows you’re responsible with your account and signals to the lender that you’re responsible with your financial obligations. In this case, lenders may offer the increase outright, similar to when you’re offered a new credit card.
Other times, your card issuer will ask you to update your income information. This sometimes signals that the issuer believes you’re a candidate for a credit limit increase and it’s looking for more information to determine if you qualify.
What to do if you’re denied an increase
Just because your credit card company denies a credit limit increase once, doesn’t mean your chances are over. You can call the creditor to ask for a reconsideration. There’s no guarantee you’ll get approved after it, but there are more steps you can take.
If you’re denied, know that creditors are required by law to explain the reason. The Equal Credit Opportunity Act (ECOA) requires lenders send you an adverse action letter in the mail within 10 business days of denial. This letter must include:
- Your credit score
- The contact information of the three major credit bureaus (Equifax, Experian and TransUnion)
- A reason or reasons for the denial
- A notice of your right to a free copy of your credit report within 60 days and how to obtain your copies
- A notice of your right to dispute the accuracy of the information provided by the credit reporting agency the creditor used
Once you have the adverse action letter, review it carefully and address the reason for denial. Perhaps that means paying down credit card debts to lower your credit utilization rate or, if you recently applied for a new card, waiting at least six months before you request an increase.
If you’re having more serious issues with your credit – such as discovering you’ve been the victim of identity theft – consider hiring a credit repair service to help you dispute the accounts that don’t belong to you. Disputing inaccurate information, such as high balances or late payments, can improve your overall creditworthiness.
How to Get a Higher Credit Limit FAQ
What is a credit limit?
A credit limit is the maximum amount your lender allows you to borrow on a credit card or other lines of credit. Lenders determine this limit based on your credit score, income, payment history and overall creditworthiness.
What determines a credit limit increase?
The factors that lenders consider to determine a credit limit increase varies by lender. However, lenders will likely take into consideration your payment history. Lenders also look at your credit report and credit utilization ratio to see how you manage your other credit accounts. Additionally, some lenders may consider recent changes in your finances, such as an income increase or employment status.