How to increase your credit limit

The limit on your credit card is an important metric that can affect your purchasing ability and, indirectly, your credit score. You can’t request a limit when you sign up for a card — it’s set by issuers based on a number of factors — but you can request a new limit down the road. Issuers may also automatically increase your limit once you’ve held the card for a while. While a higher credit limit allows access to larger borrowing amounts, it can also plump your credit score if you leverage an increase wisely.

Read on to learn how to increase credit limits on your cards, credit line increase pros and cons, good candidates for pursuing a credit increase, what to do if your request is denied and more.

How is your credit limit determined?

For traditional credit cards, issuers set your credit limit based on your past credit usage, existing available credit, income and other factors impacting your creditworthiness. For secured cards, the limit is usually determined by the amount of your security deposit.

Demonstrating successful management of your credit limit — like not maxing out cards or falling behind on payments, for example — increases the likelihood of securing more favorable terms and interest rates in the future.

Ways to increase your credit limit

Think the credit limit on your card is too low? Ask for a raise. Getting a higher credit limit is fairly straightforward, with four primary options available: You can contact your issuer online via the app or online portal, phone customer service, check for an issuer card offer, or apply for a new card that will bump your overall available credit.

Contact your issuer online

Perhaps the simplest way to pursue a credit limit jump is to log into your credit card account and look for an option such as “request credit limit increase.” Click on the option/offer and answer any questions asked. Many issuers require you to complete a form, so expect to share updated information about your income or monthly housing expenses and specify the amount of additional credit you are seeking before applying.

Call customer service

“You can commonly request a higher credit limit by simply phoning your card issuer’s customer service number, often found on the back of your card,” says Ted Rossman, senior industry analyst for Bankrate.

Similar to the online request process, you will need to provide the same fundamental information about your financial situation. Be ready to justify why you are requesting a credit increase and prepare to offer more details on your earnings and expenses. It could take several days for your request to be approved, or you may be given the green light while on the phone.

Accept an issuer offer

Keep an eye out for preapproved increase offers from your issuer, which could arrive via mail, email or when you log into your account.

These automatic increase offers provide a simple way to access more credit without having to jump through hoops — or undergo a credit check — since the issuer has already vetted your eligibility and creditworthiness. Boost your odds of getting one of these offers by updating your income information within your credit card account online.

Apply for a new card that will increase your overall available credit

If it’s time for a new card anyway, one that better fits your lifestyle and needs, you can boost your overall available credit by applying for a new credit card all together. Choose a credit card that offers you perks and rewards you can actually use, rather than one that will simply expand your available credit.

Try to avoid closing your existing card, which can reduce the length of your credit history and would reduce your available credit, which could lower your credit score.

Benefits of a higher credit limit

Requesting a more generous credit limit can be a smart step toward improving your overall credit, among other perks. Consider these benefits:

Lower credit utilization

Your FICO credit score is determined by considering five factors. Among these, one of the most crucial is the credit utilization ratio, accounting for 30 percent of your score. This ratio reflects the amount of credit you have available compared to the credit you are currently using.

For instance, if your available credit is $10,000 and you are carrying a $2,500 balance, your credit utilization ratio stands at 25 percent. Experts advise maintaining a ratio below 30 percent for optimal credit health. This is where a credit limit increase can help since having a higher limit makes it easier to sustain a low credit utilization ratio.

“In general, it’s better to have more available credit and to use less of it,” Rossman says. “Requesting a higher credit limit can lower your credit utilization ratio by providing you with more available credit, so long as you don’t use the higher limit as an excuse to overspend.”

Remember, too, that credit utilization takes all of your available credit into account. If you have three credit cards, each with a $10,000 limit, you have $30,000 worth of available credit.

Additional financial cushion

An elevated credit limit provides increased flexibility for covering larger expenses and financial emergencies and enhances your overall purchasing power.

“A higher credit limit increases your spending power. But ideally, you should pay off your account balance in full every month before the deadline to avoid paying costly interest,” advises Rossman.

Indeed, having a heightened credit limit enables you to make more substantial transactions with your card, which could lead to additional cardholder rewards.

Improved options in the future

Boosting your credit limit and elevating your credit score can bring an added advantage: Better future borrowing terms. The higher your credit score, the more favorable the terms and lower the interest rates on your future credit cards and loans. Understanding how to increase your credit card limits today could result in cost savings down the road when applying for new credit cards, mortgages or auto loans. It can even mean lower insurance premiums.

Drawbacks of a higher credit limit

Be forewarned: There are a couple of disadvantages to getting a credit limit boost, including a hard inquiry on your credit reports and the enticement to spend beyond your means.

Possible hard inquiry

While some lenders will grant a credit limit increase without performing a credit inquiry, others may do a hard pull before approving your credit limit increase. A hard credit inquiry may lower your credit score by as much as 10 points, and hard credit inquiries can remain on your credit report for up to two years, per FICO.

“Temporarily trimming a few points off your credit score may not be a big deal in isolation. But if you accumulate too many hard inquiries – such as more than five in two years – that can look risky to lenders,” Rossman explains.

The lender should inform you in advance if they will do a hard pull, so you can decide if you want to proceed knowing there will be a temporary hit to your credit score.

Additional temptation to spend

Perhaps more concerning than the repercussions of a hard pull on your credit is the possibility that a higher credit limit can lead to overcharging and blowing your budget.

“If a higher credit limit encourages you to overspend, that could be an expensive drawback — especially with the average credit card interest rate at a record high of over 20 percent,” cautions Rossman.

Accumulate too much debt and you may be unable to repay punctually, resulting in exorbitant interest charges and long-term damage to your credit.

Should I increase my credit limit?

Consider requesting a credit limit increase if you have a strong history of responsible spending and repayment. More available credit will lower your credit utilization ratio while providing more purchasing power and a larger safety net.

In particular, Rossman says a credit limit increase is probably a good idea if it only results in a soft inquiry and you won’t use the higher limit to overspend.

If, on the other hand, you aren’t financially stable or are considering applying for additional credit, such as a mortgage or auto loan, it’s best to wait to request a credit limit increase.

What to do if your request is denied

If your request for a credit increase is declined, find out why and take action steps. Your issuer should be able to tell you the reasons.

Once you know, you can begin to address those reasons. That might mean paying down your debts, improving your credit score and ensuring there are no inaccuracies on your credit report. Sometimes an issuer will decline your request due to no fault of your own — the issuer might believe you already have enough credit in relation to your income, for example.

Talking to your issuer might reveal more options you can take. If you have another card with the same issuer, you might be able to lower the credit limit of one card and shift some of the credit to another one. But once you’ve run out of options with your existing card, prepare to look elsewhere.

“For example, consider applying for a new credit card with a different issuer or request a higher limit on one of your other credit cards offered by a different company,” Rossman says.

What improves your chances of being approved for more credit?

If a credit limit increase aligns with your financial goals, understanding the process of raising a credit limit is essential. The key focus should be ensuring your credit habits signal to lenders your ability to promptly pay off your debts.

Before granting a credit limit increase, issuers typically inquire about your income and expenditures, including rent or mortgage payments. This information helps them assess whether you face financial challenges that might hinder timely payments.

Issuers evaluate various factors such as account behavior, payment history, overall utilization levels, the duration your account has been open, and how you’ve managed it thus far. Card companies want confidence in your capacity to repay borrowed funds based on your income, assets and existing obligations.

The bottom line

Take the time to learn more about your current credit limit and the extent to which it can be increased, if possible. Always consider your financial goals and spending habits before seeking a higher credit limit.

Even if you’re not ready to request a credit increase, if you demonstrate responsible credit card use and keep your overall credit rating healthy, your issuer may eventually offer an automatic increase.