Written By Natalie Rutledge
If you want to increase your credit limit, chances are you currently have a credit card with a relatively low amount of money available to you. This is often the case with people who have limited or no credit--issuers limit their liability and only offer cards with low amounts of credit. Here is a look at how you can increase your credit limit so you have more money available when you need it.
Use Your Credit Card in Place of Cash
Rather than spending cash everywhere you go, use your card instead. You can still apply that cash to a credit card payment, but you'll have the added bonus of making use of your card. Not only will this build your credit, but it will also show the credit card company that you need more money than what you have. As long as you use what you already have responsibly, they should be willing to work something out for you.
Here is the habit you need to get into:
- Get the money for something you need and put it into a bank account.
- Pay for the item with your credit card, even if it is rent or a utility bill.
- Wait for the transaction to show up in your credit card account.
- Transfer the money and pay off the entire balance on time.
If you do that continuously, you will have a very active account that is likely to receive a limit increase.
Wait for an Automatic Increase
Some credit card companies will automatically update your credit limit after you have been a cardholder for six months. However, this will only happen if you keep up with your payments. If you consistently pay on your account, the credit card company will feel more confident in giving you more money.
In some cases, it is better to wait for an automatic increase since that helps avoid your credit report being pulled.
Every time someone looks at your credit, your credit score could experience a slight decline. Over time, multiple inquiries will eat away at the score you are trying to build.
Ask for a Credit Limit Increase
If it has been six months or more since you started using your card, call to ask for an increase in your credit limit. One of the phone representatives should be able to run your information and see if you qualify. Note that if your credit score has gone down or stayed the same, you may not qualify for an increase just yet. It depends on how much you have used your card. In most cases, a consistent history of use and repayment will be enough for you to receive a higher credit limit.
If You Get Declined…
If your request for a credit limit increase gets declined, don't get discouraged. This may just be because you asked about it too soon. Keep up with the plan above, and try again in another six months or a year. If something has gone wrong in your credit outside of the card, take care of that and wait a while before asking for a limit increase. You need to have something positive to bring to the table.
Should You Get a Credit Limit Increase?
Now that you know how to increase your credit limit, you need to think about whether or not you should do this at all. This is a great opportunity to build your credit and have more backup money, but you should not do this if it will only be a temptation. Some people cannot control themselves when they have a credit card available to them. If you're one of them, stick with what you already have. It is better to have a small account that helps your score than a large account that puts you in debt. When you feel confident in your ability to handle this responsibility, then make the switch to a higher limit.