A high credit limit can offer quite a few advantages, from increased purchasing power — which could come especially handy in an emergency — to an improved credit rating.
While requesting a better limit isn’t advisable in the event you’re having trouble paying down your bank card debt, it will probably be a sensible financial decision in the event you typically don’t carry a balance month to month.
Read on to learn how you can successfully request and secure a better credit limit.
Find out how to get a better credit limit: a step-by-step guide
There are some things it’s best to know before asking for extra credit. To start with, it’s vital to know the way credit limits are calculated in the primary place.
If you apply for a bank card, the bank will review your credit rating, debt-to-income ratio, credit utilization ratio and credit mix. This may help them determine whether you’re prone to repay your debts on time or in the event you are at a high risk for defaulting on debt.
Borrowers with good credit scores and high incomes will probably receive higher credit limits than those with poor credit histories and lower incomes.
Which means that in case your credit rating and income have risen because you first got your card, you have got likelihood of getting a better credit limit.
Listed below are the steps you must take to request a credit limit increase.
1. Check your credit report and rating
Step one is to get a replica of your credit report, preferably from all three major credit bureaus: Experian, TransUnion and Equifax. This may show you how to get a clearer view of your financial situation.
Note that, with the intention to see your FICO rating — the credit scoring model most lenders use — you may should purchase credit reports from the bureaus themselves. While many web sites offer free credit reports, these typically don’t include scores or might only include the rating from a special and less-used scoring model, the VantageScore.
Once you have got your report, it’s vital to investigate it rigorously, checking for negative marks and/or inaccurate items. (If that is your first time analyzing your report, or need a refresher, make certain to ascertain out our guide to how you can read your credit report.)
Note that, in the event you find mistakes or outdated negative items in your credit report, it’s best to dispute these things with the credit bureaus. By law, they’ll have 30 days to research and must eliminate the items out of your report in the event that they’re inaccurate.
And, in the event you discover you have got multiple errors in your report — perhaps because of identity theft or other financial issues — you might consider a credit repair company that may dispute the errors for you.
Next, it’s best to evaluate your rating and see where it falls within the ranges outlined below.
Borrowers with credit scores that fall within the excellent and exceptional ranges could have the perfect possibilities of successfully requesting a rise to their credit limit. In case your rating falls within the “good” range but shows significant improvement because you first opened the account, your request for a rise may also be granted.
In case your rating is within the fair and poor range, the perfect thing to do is to take a while to rebuild your credit before applying for a rise.
2. Evaluate your bank card usage — and pay down debt if needed
Your credit utilization ratio, which is a sign of how much of your available credit you’re using, plays a crucial role in your credit rating and weighs heavily in lenders’ decisions. One quick method to raise your credit rating and increase your possibilities for a better credit limit is to diminish that ratio by paying down your bank card debt.
You’ll have a greater likelihood at successfully requesting a rise in case your utilization ratio is under 30%, preferably in the one digits. In case you find that your ratio is just too high, it’s idea to pay down your debt before asking for a rise.
3. Get your documentation ready
Each bank card issuer could have different criteria for credit limit increases; nevertheless, you ought to be prepared to supply evidence of your income and employment status in case they request it. This might be in the shape of your wage and tax statements (Form W-2) or recent paystubs.
4. Check your timing
Timing may be crucial with a credit limit increase request. It’s best to avoid requesting one shortly after opening a latest credit account (which may impact your credit rating) or when you have got high bank card balances. It’s best to pay down cards significantly and wait a couple of months for credit bureaus to catch up together with your latest, lower credit utilization ratio.
5. Contact your bank card company
Once these pieces are in place, you may request a credit limit increase in several ways:
- Online. Most major card issuers offer the choice to request a credit line increase right on their web sites.
- By mail or e-mail. Some issuers allow for written requests, which you may send via snail mail or e-mail.
- Phone. Calling the number on the back of your card and chatting with a customer support representative might still be the perfect option, especially in the event you’d like to elucidate how your credit rating and income has increased because you first opened the cardboard. It also lets you receive immediate feedback in case your request is denied.
What in the event that they deny your request?
If the bank card issuer denies your request, it’s best to ask for feedback as to why. This lets you finetune your strategy and check out again in a couple of months. For instance, in case your credit rating just hasn’t improved enough, it’s idea to spend a minimum of six months paying down debt and constructing a stronger on-time payment history after which try again.