by Daniel | Last Updated April 7th, 2022
We may earn a commission for purchases using our links, at no cost to you.
Are you looking for a way to increase your credit limit from a couple of thousand dollars up to $10,000 or more but don’t know where to start?
In this article, I’m going to cover a few different things that you will need to do to make this happen. I’ll go over why you should apply for a credit limit increase, what is actually involved in being eligible for an increase, the best practices you should always follow, and then finally I’ll talk about what you can do if you don’t receive approval for an increase.
Now Initially, when you are first approved for a credit card, it is pretty common for the credit card issuer to set your credit limit based on your income, credit score, credit history, and any financial obligations that you may have at the time, whether that be a mortgage, student loan or car repayments.
So if you don’t have an extensive credit history, and your income is relatively low, it shouldn’t come as a surprise that your credit limit will most likely be quite low.
And it’s worth knowing that it does take time to build up your credit score and credit history, which will in turn improve your creditworthiness and then, the likelihood of getting a decent credit limit on most credit cards that you apply for.
Why Should I Apply For A Credit Limit Increase?
And this is a question that is worth considering as it could be a very straightforward reason as to why you want a credit limit increase.
For instance, if your current credit limit is very low (like $500 or $600) and does not meet your spending requirements or allow you to make the purchases that you need each week, then getting a credit limit increase would make sense.
Generally speaking, having a higher credit limit on your credit card is a positive thing, as it will give you the ability to make larger purchases, which can be useful if you know you have any large bills coming up.
It will also help you to maintain a lower credit utilization, as you will have access to more credit, but it is important that you continue to maintain your credit payments by being consistent and not spending more money than you can afford.
And I will go into more detail about what exactly credit utilization is later in this review.
How Do You Know If You Are Eligible to Get a Credit Limit Increase?
Generally speaking, you will need to have been a cardholder for at least 3 months, anything less than this will probably not work in your favor.
For the best chance of getting approved it’s better to try and wait for around 6-12 months before applying, as this will give you time to build a decent credit history and credit score.
Also, most card issuers will only allow you to request a credit increase once every 6 months per credit card, and this makes sense, as any time shorter than this won’t really provide enough information to the card issuer about your ability to be a trusted and reliable credit cardholder.
So, during this 6-12 month period, and going forward, be sure you continue to make payments on time, and keep your balance at a reasonable level (preferably totally paid off).
What Should You Do Before You Apply For a Credit Limit Increase?
Now there are a few important steps you will need to take before you actually request a credit increase, and it’s important that you follow these steps as it will increase the likelihood of you actually getting approved for a credit increase.
So first of all it’s important that you review your credit report for any mistakes or fraudulent activity that may have been made to your account. And this is important, as everything on your report should be up to date and in order before you apply.
Now to check your credit report you can use either Experian, Equifax, or Transunion.
And usually each year you are eligible to get a free credit report from each of these companies, which is 3 free credit reports in total each year.
But due to the pandemic, you will actually be able to get free weekly credit reports from each of the 3 reporting agencies until the end of 2022.
Now after you have completed this first step and made sure your credit report is looking good, you will then want to make sure you go over the following steps:
- Make sure your income information is up to date.
- Also check that your employment status, address, and phone number are correct.
Finally, it’s extremely important that you try to pay down as much of your current credit balance as possible, and best of all, pay it all off if you can.
This is something that will be viewed more favorably by the credit card lender as you will be seen as a person with lower risk and the ability to make timely payments.
Other Things To Keep In Mind
Now there are a few other factors to take into account before applying for a credit limit increase, and it’s important that the following steps are in place to ensure that you have the best chance of receiving a decent credit increase.
- Be Prepared
If you decide to call your card issuer to ask for a credit limit increase, make sure that you are well prepared.
You should know exactly how much you would like to increase your limit and why. Also just be aware of how much of a credit limit increase you actually ask for.
If your credit score isn’t very good, or you have missed a few payments in the past, I would recommend asking for around a 10-20% increase, anything more than this may be declined by the card issuer.
Although, if you have a really good credit score and have always paid off your balance, it should be fine to ask for even more than that. - Are you using your credit card regularly?
This is really quite important, most credit card issuers will want to see that you are actually using the card, as they make money when you use the card.
As an example, in 2020 the credit card industry in the US made $51 billion dollars just from transactions been made.
So the more you spend, the happier they will be (as long as you pay off your balance) - Making Consistent Payments
Do you make consistent payments to your credit card balance? and always make sure you have totally paid off your balance in full by the due date?
This is one of the most important things that you need to do and keep an eye on.
A few ways to help stay on top of this is by setting up auto-pay through your credit card account.
You could also consider creating calendar alerts that will remind you of any upcoming payments that you have due, or just create a to-do list that you read and complete each day. - Being responsible is a big plus
If you have an ever-increasing debt on your credit card it will not work well in your favor if you are looking to be approved for a credit increase.
It’s extremely important to take note of your spending habits so you can keep an eye on what your credit utilization is.
Also, make sure that you always make timely payments to your balance to avoid any unwanted interest charges or fees - Your Card Issuer May Automatically Give You a Credit Increase
Now, something that is possible is that your credit card issuer may well automatically increase your credit limit over time.
And this is most likely to happen as long as you continue to make constant payments to your balance and don’t receive any penalties due to late payments. - Don’t Ask For Too Much
If you do ask for a credit limit increase, try not to ask for an unrealistic increase, if your credit limit is currently $600, it’s best not to ask for an increase to $30,000 as it is highly unlikely they will approve this request.
An increase from $600 to $1,500 is a lot more reasonable and more likely to be approved. - Understand What Credit Utilization Is, As It Makes a Huge Difference!
Now if you have never heard of what credit utilization is, it is an extremely important factor in determining what your credit score is.
And put simply, Credit utilization is basically the percentage or amount of credit that you are using of your actual credit limit.
So, if you have a credit limit of $1,000 and spend $400, this will be seen as using 40% of your available credit limit, or 40% Credit Utilization, which is too high.
It’s important to always try and keep your credit utilization below 30%, which if you have a $1,000 credit limit would be no more than $300.
And this basically shows credit card issuers and lenders that you less risk to them as you are able to manage your credit card appropriately.
What To Do If You Get Rejected/Not Approved By Your Credit Card Issuer?
When you’re not approved for a credit limit increase, it is usually due to a number of things which can include a limited credit history, which the bank or card issuer uses to determines what your creditworthiness is.
And if this is the case, there are a few things that you can do to help your general creditworthiness and chance of getting approved the next time you apply for a credit limit increase.
So as I mentioned before, try to keep your credit utilization under 30%, and to help with this try to pay down more than the monthly minimum payment each month, and if possible pay everything off, as this will help you avoid any interest charges and negative reporting on your account.
Also, make sure that you are actively using the credit card on a regular basis, as most card issuers will want to see that you are using the card, as this is one way that they make money.
Now, if you have any outstanding money owing anywhere that is overdue, try to pay it off as soon as possible, as owing money that is overdue will negatively affect your credit score.
Lastly, if you actually have a good credit score and no money owing and are still rejected for a credit limit increase it may be time to look at a different bank or credit card issuer.
And by doing this can potentially result in getting an even better credit limit that you have with your current bank.
It will mean that you have even more available credit which as I mentioned before will help with your credit utilization ratio and therefore your credit score.
Now if you do choose to apply for a new credit card and you have a good credit score, its important to apply for a higher tier credit card such as the Chase Sapphire Preferred card which generally has a minimum credit limit of $5,000, with some people reporting credit limits of $10,000 or more.
Beginner credit cards generally have very low minim credit limits for new users that have a poor credit score or no credit history.
For example, the Chase Freedom Flex card has a credit limit that starts at just $500 which is not much, as a credit utilization of 30% on a $500 credit limit is only $150.
Now if you’re looking for more information on how to increase your credit score you can check out my article here, where I explain everything you need to do to help you achieve a higher credit score.
And if you are looking for a good credit card, why not check out my review of the best credit cards for 2022 here.