How To Increase Your Credit Limit: Your Guide to More Credit
Your credit limit is not set in stone. These tips will help you get a credit limit increase.
Contributing Writer at Tally
April 7, 2022
The credit card issuer sets a credit limit when you get your credit card. While this may seem like it’s set in stone, you can actually get a credit limit increase. With a credit limit increase, you have more flexibility, and it can even help improve your credit score.
If you’re wondering how to increase the credit limit on your credit cards, we’ve got the answers below.
How to increase your credit limit
When seeking a credit limit increase, you can boost your chances of getting approved with a few tips and tricks.
Wait for a pay raise
Your credit limit is based on a few variables, including your credit score and income. A great way to increase your chances of getting approved for a credit line increase is to do so right after receiving a pay raise at work, getting a new job with higher pay or taking on a side hustle that increases your annual income.
Once you receive this pay raise, you can either update your annual income on your credit card account profile online or call the credit card company to update it. After this update, you can request a higher credit limit and have a better chance of getting approved.
Maintain a great payment history
The credit card issuer will likely perform a hard inquiry on your credit when you request a credit limit increase. This will give the issuer access to your FICO credit score and your credit report from the credit bureaus — Experian, Equifax and TransUnion. The higher your credit score, the better your chances are of getting approved for the limit increase.
Your payment history makes up 35% of your credit score, making it the most important variable. To determine your payment history, the credit bureaus look at your monthly payments on credit cards, retail accounts, installment loans and mortgages to ensure you are making your payments on time. They also consider public records, like bankruptcies, judgments or foreclosures, and any collections accounts.
The longer any negative items have been on your credit report, the less impact they have. A five-year-old collection account will have less bearing than the five years of on-time payments to your credit cards.
Reduce your credit utilization ratio
Your credit utilization rate also impacts your credit score. It’s part of the “amounts owed” variable, which accounts for 30% of your credit score.
The credit utilization rate is the percentage you are using — your total credit card balances — of your total credit limits.
By paying down your credit card balances, you lower your credit utilization ratio, and the lower your utilization ratio is, the more positively it impacts your credit score. With a higher credit score, you have a better chance of getting approved for a credit limit increase.
Avoid closing old accounts or opening new accounts
Again, maintaining a good credit score will play a key role in getting that credit limit increase you need. Two factors that play a role in your credit score are new credit and the length of your credit history.
The “new credit” variable accounts for 10% of your credit score and looks at:
How many hard credit inquiries you’ve had in the past 12 months: The fewer credit inquiries you have, the less negatively it impacts your credit score. When you apply for a new credit card or loan, you’ll likely go through a credit check, so keeping these applications to a minimum is ideal.
How long it’s been since you opened a new account: The older your newest account is, the more favorable it is for your credit score.
How many new accounts you have: The fewer new accounts on your credit report, the more favorable it is to your credit score.
The “length of credit history” variable accounts for 15% of your credit score and looks at:
How long your credit accounts have been open: It considers the average age of all your debts and the ages of your oldest and newest accounts. The longer your average account has been open, the better.
How long specific credit accounts have been open: Looks at the age of revolving (e.g., credit cards and lines of credit) and installment debts (e.g., auto lenders, mortgages and personal loans) separately. Again, the longer, the better.
How long it’s been since you used each account: If you have an old credit account that lays dormant, it won’t have the same positive impact as an old account you use frequently.
Request a limit on a card you use often
You can also request a credit limit increase from your credit card issuer. Choose to make the request on a credit card you’ve had for a long time, that you use often and where you’ve maintained a good payment history.
If you have a long history of on-time payments, the company may be more generous with its credit limit increase because you’re a valuable cardholder.
How to request a credit limit increase
In many cases, you can request a credit limit increase in two ways: online or by phone.
Requesting a credit limit increase online or via your credit card’s mobile app is the easiest way. Many cards offer a link to quickly request a limit increase on the main account page or elsewhere in your online account or in the mobile app. From there, simply follow the prompts to request the limit increase.
Alternatively, you can submit a credit limit increase request over the phone by calling your credit card company using the phone number on the back of your card. The representative may ask a few questions about your income, employment status and living situation before processing your application for a credit card limit increase.
The benefits of a credit limit increase
A higher limit on your credit card has a few benefits.
Reduces your credit utilization ratio
When you receive a credit limit increase, the higher credit limit will reduce your credit utilization rate, which can help improve your credit score.
For example, if you have $1,000 in credit card debt on a card with a $1,500 credit limit, you have a 66.6% utilization rate. However, if you request a credit limit increase and get a new $3,000 limit while maintaining the same balance, your utilization rate drops to just 33.3%.
Increases your available credit
Once your credit limit increases, you’ll now have more available credit on that credit card to use as needed.
This is particularly helpful on a card with a 0% APR balance transfer promotion. In this case, you can use the balance transfer option to pay off credit cards with high interest rates and pay no interest during the promotional term. Keep in mind, though, that these credit cards often have balance transfer fees of 3% to 5%.
The downside of a credit limit increase
Every credit card company will do things differently, but some will perform a hard credit inquiry before approving you for a credit limit increase. If so, this hard inquiry could have a small negative impact on your FICO credit score for the next 12 months.
However, some credit card companies will perform only a soft inquiry, which doesn’t impact your credit score.
Increasing your credit limit can be a good thing
Applying for a credit limit increase is fairly simple, whether you do it online or over the phone. And if you’re a responsible cardholder who doesn’t risk using the additional credit for overspending, the benefits are plentiful.
Just make sure your credit score is in the right place and your income has remained consistent or increased since you got the credit card before applying for the increase.
If you’re looking to pay down your credit card debt to put you in a position to improve your credit scoring factors, the Tally† credit card debt repayment app can help. The app helps you manage your credit card payments, and Tally offers a lower-interest line of credit, allowing you to pay off higher-interest credit cards efficiently.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.