by Daniel | Last Updated January 20th, 2022
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Increasing your credit limit can have quite a few positive benefits, one being an improvement to your credit score.
It can also make quite a big difference to your spending power, which is specifically useful if you need to make larger purchases without harming your credit utilization.
In this article, I’m going to guide you through the steps that you will need to take to help your chances of receiving a decent credit limit increase.
And then finally I’ll go over a few things that you should be aware of before you do increase your credit limit.
These things are common mistakes that some people make that can have a negative effect on your financial situation.
Make Sure You Have A Good Credit Score Already
So the first and most important thing to make sure you have in order is that you have a good credit score.
And this will be needed no matter what the case is if you want to be approved for a credit limit increase.
It basically consists of always paying off your balance in full and on time.
Keeping your credit utilization below 30% Is also advisable.
It’s also important that you aim to do this over the long term and on a consistent basis.
And if you can do this, it’s likely that you will have a good credit score.
Just think, when banks and lenders are considering increasing your credit limit, having a good credit score will really make a big difference in their final decision.
As you can imagine, if a bank or lender sees that you have a poor credit score, they will assume that there is less chance of you actually paying them back their money on time, if at all.
Compare this to them seeing that you have a high credit score, this will show them that you have actually been careful with their money and that you have made sure to pay your balance back in full and on time each month.
So simply put, if you have a high credit score, lenders or banks will be much more likely to consider increasing your current credit limit as they will see that there is less risk of you not paying them back and that you can be trusted.
Apply For A New Credit Card
Now the next way you can go about increasing your credit limit is by applying for a new credit card.
And this is probably one of the easiest ways of actually increasing your credit limit.
Essentially it will add an extra line of credit to your existing account (assuming it’s with the same company).
And even if it’s not a higher credit limit than your current credit card, it will still increase your overall available credit.
But seeing that the point of this article is to get a large credit limit increase, it’s important that be selective in what credit card you actually apply for.
If you do have a good credit score, I would recommend that you apply for a higher-tier credit card like the Chase Sapphire Preferred or Reserve card.
And the reason for this is quite simple, Beginner cards like the *Chase Freedom Flex card or the Citi Double Cash Cash both start with a low minimum credit limit of just $500 whereas the Chase Sapphire Preferred card comes with a minimum Credit limit of $5,000 and the Reserve card comes with a minimum credit limit of $10,000.
So depending on who card you use for this example it’s either 10 or 20 times more than what you will get with a beginner credit card and it’s not uncommon to get a higher minimum credit limit than this if you have a good credit history.
And if you would like some ideas of the best credit cards available now, why not check out my review of the best credit cards for 2022 or the best no annual fee credit cards for 2022.
So simply put, if you want to get a decent credit limit increase, it’s really important that you apply for the right credit card.
Manually Request A Credit Increase
Now the next method you can use to get a credit increase is to manually request one from your lender or bank.
And to do this, all you have to do is call the number on the back of your credit card and speak with a representative.
But before you do try this, it’s important that you have had an account with them for at least 6- 12 months, and have been consistently paying off your balance each and every month.
The keyword here is ‘consistent’.
Now, if you don’t want to call the card issuer, you can actually apply for a credit limit increase online directly through your account, which can sometimes be easier than speaking with someone.
But if you decide to call the card Issuer, make sure you are well prepared, you should know exactly how much you want to increase your credit limit, and why.
You need to give them more than enough reason to actually give you the increase.
And just be mindful of how much of an increase you actually ask for, If your credit score isn’t outstanding and you have missed some of your payments, ask for around a 10-20% increase – anything more than this may be a red flag to the card issuer.
But, if you do have a really good credit score and have consistently paid off your balance each and every month, feel free to ask for an even higher credit limit increase.
Now a few valid reasons for asking for a credit limit increase would be that you want to try to improve your credit score or that you have a large purchase coming up and you don’t want to negatively affect your credit score by maxing out your current credit card.
Also, make sure to let the representative know that you have been responsible with your account and have been paying off your card in full each month.
And if you are successful with this and do receive a credit limit increase, you can use this information with other lenders to try and get a similar increase from them as well.
Just remember that having a good credit score is imperative before you do take any of these steps.
And if you want to know how to increase your credit score, why not check out my video here.
Apply For A Business Credit Card
Now another way of securing a credit limit increase is by applying for a business credit card.
It’s not uncommon for banks and lenders to allow customers with business credit cards to have higher credit limits than customers with personal credit cards as they are more likely to have higher and more frequent costs than what the average consumer would.
According to a report from Experian, in 2020, the average credit limit in America for personal use was just over $30,365* whereas the average credit limit for business credit cards was just over $56,000*
Now it can sometimes be a bit of a challenge getting approved for a new Business credit card, but it is possible to get one without technically owning a business, you just need to prove that you are making some money independently, which can include anything from selling products through eBay, freelancing through websites such as Upwork or fiver or even just driving for Uber or Lyft.
Final Thoughts
Now I just wanted to make sure you’re aware of a few important points that you should know before you ask for a credit limit increase.
Initially, when you do apply for a credit limit increase, it’s not uncommon for the lender to make a hard inquiry.
Basically, they will need to see your credit file so they can determine if you pose a risk to them as you will be borrowing more money.
And this will negatively affect your credit score in the short term which is usually just for a couple of months.
Although in the long term it will have a positive effect, just know that a hard inquiry usually stays on your credit report for about 2 years.
So if you make too many requests for a credit limit increase, it can make a noticeable dent on your credit score.
Also, it’s probably not wise to request a credit limit increase if you are already having any difficulty making payments to your current balance, or if you need the money to pay off bills that you are having difficulty paying for.
Having access to more money can potentially result in you owing more and more money which can put you in a great deal of debt- which is not good.