When and How to Increase Your Credit Limit

When you’re attempting to build your credit, it might be tempting to increase your credit limit as quickly as possible. After all, isn’t that the best way to get to the point where you can buy a new car or qualify for a mortgage?

Maybe not. At Addition Financial, we spend a lot of time working with our members to help them build their credit. Part of that involves advising them on the best way to increase their credit limits. If you do it too quickly, you might run into trouble.

If you want to know how to increase the credit limit on your credit card, here’s how to do it.

Ask for the Right Reasons

The first thing you need to do is to think about why you want the increase. There are good reasons and bad reasons, and you should ask only if your reasons support the result you want.

Some of the good reasons to ask include:

• You want the spending flexibility that comes with a higher credit card limit
• You tend to use one credit card more than the others and you want to stop using the others and put all your purchases on one card
• You have some big-ticket items to purchase that you know you can pay in full when your bill arrives

Any one of these reasons would provide a good argument for getting a boost in your limit. However, the same cannot be said of these reasons:

• Your credit card is maxed out and you still have things you want to buy
• You’re in financial trouble and you want the higher limit to help you out
• You didn’t get that raise you were counting on

If your answer bears any resemblance to these three reasons, then you should not ask for an increased limit. You’re likely to run into trouble if you get it.

Ask at the Right Time

The timing of your request can make a difference in whether it gets approved. Most often, credit card issuers want to be able to raise your limit. They make more money if they do – but they must be confident that you can handle the higher amount.

It’s a good time to ask if you:

• Have paid your bills consistently and on time, and you have started to build up a solid credit history
• Are making more money than you were when you got the card
• Your expenses are lower than they were when you got the card
• Your card isn’t maxed out when you ask

These things all serve as indicators that you’re ready for a higher credit limit. The very first thing your financial institution will do is look at your payment history with them.

On the other hand, it’s not a good time to ask if you:

• Have made many late payments or have skipped payments in the last year
• Are making less money than you were when you got the card
• Have higher expenses than you did when you got the card but are making the same or less money
• Your card is constantly maxed out
• You have recently applied for other cards or loans that may have dinged your credit score

Again, keep in mind that the credit card issuer is looking at your ability to pay. They want to know that you are asking for the right reasons and not seeking to put a band-aid on your financial difficulties by getting an increase.

Plead Your Case

Many financial institutions will allow cardholders to ask for an increased limit online or on the phone. If you feel that your information supports it, applying online may be the way to go.

However, the benefit of calling is that you’ll have a chance to speak to someone about your situation. If you decide to call, make sure to have your ducks in a row. You should be prepared to answer questions, including:

• Why you want the increase
• How your financial situation has changed since you first got the card
• Your current monthly income
• The amount of the increase you want

It’s a good idea to write key information down before you apply. That way, you can answer questions confidently.

You should also be aware that some credit cards that cater to people with limited credit history charge a fee to increase the credit limit. If that’s the kind of card you have, make sure you understand the fees before you move forward. You may be better off waiting until you can qualify for a better card.

Asking for an increase in your limit might be a good idea – and it might not. And even if you’re declined, that doesn’t mean you should give up. You can use the information here to ask again at a more advantageous time.

If you have any other questions, feel free to contact our team at Addition Financial.