How to Ask for a Credit Limit Increase

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Post Written by: Integra Credit | October 20 2023

Utilizing a credit card or line of credit can open the door to many benefits. One of those benefits may be access to higher lines of credit through credit limit increases. While some lenders will automatically extend your credit limit, other lenders may require you to request it. Let's explore how to ask for a credit line increase and the steps you can take to do so.

What Is a Credit Limit?

The credit limit is the highest amount a lender or credit card company will allow you to charge or spend on your revolving credit account. Credit card companies want the limits to be high enough to encourage use, but low enough to prevent you from spending more than you can pay back.

While most people immediately think of credit cards when considering credit limits, it applies to any revolving credit. Revolving credit is a credit line that remains open and available as you pay the balance. Examples of revolving credit include credit cards, home equity lines of credit (HELOCs), and personal and business lines of credit.

Secured vs Unsecured Credit Limits

Credit limits can also apply to both unsecured credit and secured credit. For secured credit cards and other lines of credit, the lender will usually set the amount of your collateral as the credit limit. For instance, if you take out a Home Equity Line of Credit (HELOC), your credit limit may be based on the equity you have in your home. While secured lines of credit have an associated asset, unsecured lines of credit do not. Unsecured lines of credit are issued entirely on your creditworthiness and financial profile. As such, lenders use an array of factors to determine your credit limit sweet spot on unsecured lines of credit, such as:

  • Credit history and score
  • Income
  • Debt-to-income ratio
  • Limits on other lines of credit and credit cards

Whether it's a credit card or a line of credit, the credit limit is the maximum amount you can spend without being subject to additional fees and penalties in addition to your regular monthly payment.

How to Ask for a Credit Limit Increase

Every lender can have different policies and procedures for credit limit increases. While some lenders may require you to know how to ask for a credit limit increase, others may increase your line of credit automatically. Here are some options for how to increase your credit limit.

  1. Submit an online request. Some cardholders allow you to request a credit limit increase online. To determine if your lender allows online credit increase requests, log into your account and search for an option concerning a "credit limit increase." If this option is available, the lender may request additional information, such as income updates.
  2. Call your lender. Another option is to reach out to the lender directly and inquire about how to ask for a credit line increase. If the lender allows credit limit increases, they can guide you toward the next step.
  3. Understand lender-specific policies. Keep in mind that each lender may have its own unique policies and procedures for credit limit increases. It's important to familiarize yourself with their requirements and follow their instructions to increase your chances of a successful credit limit increase.

What to Do Before Asking for a Credit Limit Increase?

Knowing when to ask for a credit line increase is just as important as how to ask for a credit line increase. Here are three steps you can take before asking for a credit line increase that may improve your chances of approval.

  1. Optimize your credit score. Before you complete a request for a credit limit increase or speak to your lender, review and work to optimize your credit score. When reviewing your credit report, look for errors that can harm your score. Make sure to review your credit report regularly and stay on top of changes. In addition, watch out for other factors that may drag your score down, such as high credit utilization. One popular rule of thumb is to keep your credit utilization rate below 30% of the limit on a revolving credit account. However, the lower the better. Optimizing your credit can make it easier for you to borrow money.
  2. Make sure you have a history of on-time payments. Another factor many lenders use to determine credit line increase eligibility is your payment history. Consistently making on-time payments can bolster your application and strengthen your case for a credit limit increase. Late payments, on the other hand, do the opposite. More so, late payments can stay on your credit report for up to seven years. To help ensure you stay on track, find the budgeting method that works best for you.
  3. Review your annual income. Did you add a new source of income or get a raise during the year? Your income is a factor creditors use to determine eligibility for increasing your credit limit. Make sure lenders have the latest income information. Some lenders allow you to update this information via their website or app. If you are expecting a raise in the future, it may be beneficial to wait until after the increase to request a credit limit increase.

How to Find Out If You Qualify for a Credit Limit Increase

There are two broad ways to get a credit limit increase.

Submit a Formal Request

Submitting a formal request with the lender is the most direct way to get a credit limit increase. After you make the request, the lender may review your credit report through either a soft inquiry or a hard inquiry. While a soft inquiry doesn't impact your credit score, a hard inquiry might. Reviewing the lender's credit limit increase policy or checking with the company can help you understand their criteria and whether you meet the basic qualifications for a credit limit increase.

Automatic Credit Limit Increase

The second way to get a credit limit increase is when the lender systematically reviews your account and automatically increases your credit limit. This tends to occur after you've demonstrated responsible credit habits for a period, which may include:

  • Paying more than the minimum payment
  • Keeping your credit utilization low
  • Making on-time payments

With automatic increases, you should review the lender's policies to understand how to best position yourself for an automatic credit limit increase.

Disadvantages of Asking for a Credit Line Increase

Even though a credit limit increase can have a number of benefits, there are potential drawbacks you should consider. For starters, how well do you manage debt? If you struggle to repay debt or tend to overspend, a credit limit increase may do more harm than good. Another consideration centers around the lender's policy of using a hard or soft inquiry to approve credit limit increases. If the lender does conduct a hard inquiry, make sure you understand the ramifications. Particularly, if you've recently had a hard pull of your credit, you may want to consider waiting.

FAQs

  1. How long does it take to get a credit limit increase? The time it takes to get a credit limit increase depends on the credit card issuer and your creditworthiness. Some credit card issuers automatically review your account and increase your credit limit after a certain period, while others may require you to request a credit limit increase. If you have a good credit score, a stable income, and a history of making on-time payments, you may be more likely to receive a credit limit increase.
  2. What triggers an automatic credit limit increase? Credit card issuers may automatically increase a cardholder's credit limit based on several factors. These factors include consistent on-time payments, low credit utilization, length of credit history, income increase, and credit score improvement. Credit card issuers conduct periodic reviews of their customers' creditworthiness, and any of these factors, as well as others, may be used to determine whether to increase a cardholder's credit limit. Make sure to ask your lender about the specific factors they consider when reviewing eligibility.

Sources

  1. Everything you need to know about secured credit cards
  2. What Is a Credit Limit? How It's Determined and How to Increase It
  3. How Your Credit Limit is Determined by Credit Card Companies
  4. Free Credit Reports
  5. What Is A Good Credit Utilization Ratio? | Bankrate
  6. How Long Does Information Stay on my Equifax Credit Report | Equifax
  7. How to Increase Your Credit Limit - Experian
  8. Hard vs Soft Inquiries: Different Credit Checks | TransUnion
  9. Is There a Hard Pull if I Apply for a Credit Card? - Experian

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