Credit limit
increases are beneficial to you in more ways than one. Not only do you
have more available credit to work with, but raises in your credit limit
can also improve your credit score by lowering your credit utilization
ratio. Follow these steps to get a credit limit increase.
Part 1
Demonstrating reliability
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1
Pay your bill on time for at least 6 months. Of
course, you should always pay your credit card bills on time, as late
payments could result in credit limit (and credit score) decreases. Six
months is simply the minimum amount of time you will have to make timely
payments on your account before creditors will even consider raising
your credit card limit.
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2
Lower your credit utilization. Your credit
utilization is pretty much how much money you have on your credit card
compared to your overall limit. For example, if you have $4,900 worth of
debt on a card that has a $5,000 limit, your credit utilization is
extremely high. If, on the other hand, you have $300 worth of debt on a card that has a limit of $5,000, your credit utilization is
extremely low. A low credit utilization is what you want.
- If you have multiple credit cards, don't be hesitant to move debt
from one card to another in order to massage your credit utilization. If
one card has a higher limit, for example, move debt onto that card and
off the card with the lower limit. Do this so that both credit
utilization ratios more or less balance out.
- Shoot for a credit utilization rate (debt to limit ratio) of about
10%. A 10% credit utilization rate is ideal, however, so if you happen
to have a rate of 20%, or even 30%, that's okay. Your credit utilization
is 30% of your credit score, which itself is a factor in getting a
limit increase.[1]
Part 2
Choosing which card to increase
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1
Figure out which credit card you'll ask for a limit increase on.
Why, aside from the obvious reason? Asking some credit card companies
for a limit increase can cause the credit issuer to check your credit
score, known in the business as a "hard pull."
[2]
A hard pull can cause your credit score to go down, only about five or
10 points. If your credit score is teetering on the edge of solvency,
however, those 10 points can be very significant.
Part 3
Making an application
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1
Gather supporting documentation. In some cases, it
may be necessary to prove that you are worthy of a credit limit
increase, even if you have paid your bill on time for 6 or more months.
You can just ask for an increase in your credit line and hope for a
favorable response, or you may want to better your chances by compiling
information that supports your ability to commit to higher credit card
payments before you implore about changes in your credit card limit.
- Income. If your employment situation has improved and you are now
making more money and/or working more hours, provide check stubs or tax
returns.
- Change of occupation. It is also useful to know that different
occupations carry different credit risks, and that a change in
occupation, even without a raise, may improve your ranking with
creditors and qualify you for credit limit increases.
- Debt. Perhaps you've paid off a car or other credit accounts and
your debt to income ratio is now lower. In this case, you may be able to
provide proof of your closed accounts in order to receive a credit card
limit increase.
- Loyalty. Tell them how long you've been a customer with them. If you have an outstanding credit history, low debt, and you've been a loyal customer through thick and thin, it's worth something to publicize that information.
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2
Get an idea of how much of an increase you would like to request.
If you ask for too high an amount, your account could be flagged for
further review; if you ask for too low an amount, you could be denying
yourself of valuable credit. Examine your circumstances to determine how
much of a credit limit increase is realistic for you (i.e. how much you
want, how much you need and how much of a payment you can afford each
month).
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3
Contact the creditor to make your request. This is where the rubber meets the road.
- Some credit card companies provide their customers with an online
option for requesting credit limit increases. If this is the case, you
simply need to sign into your account and make the request through the
creditor's automated system.
- Call the phone number on the back of your credit card to speak with someone directly about raising your credit card limit.
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4
If your request fails, consider sneaking through the back door.
If your request for an increase doesn't work out as planned, consider
this sneaky little trick if you absolutely need the increase. Apply for a
different, second card from the same company. Next, re-allocate the
credit limit to your old card.
[3] If you don't get caught, this is a decent — but very backhanded — way of increasing your limit.
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5
Don't go overboard. Just because you have a more
credit at your disposal doesn't mean that you need to go crazy with it.
The good news is this: the less money you spend on your credit card, the
better your credit score and the higher your chances of getting a limit
increase in the future.
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