People often use credit cards to make payments when they do not have the money upfront. While these cards are useful, they have a limit or cap, meaning one cannot borrow more than a set amount. This can be a problem when a person faces a financial emergency and needs to spend more. Fortunately, there are a few ways to increase the credit card limit, provided one meets the eligibility criteria.
Safe Credit Expansion Strategies
Every lender or card issuing company has specific criteria for granting credit card limit increases. Generally, established cardholders who have been long-term clients and use their credit line regularly are more likely to receive increases in their credit card limit. Moreover, banks only lend extra credit to customers they have reason to trust. This trust is built over time by taking certain important measures.
Making On-time Payments
If a person has always paid their credit card bill on time, they will likely be approved for an increased credit limit. Timely payments show a person is responsible and builds a positive credit history. It is a sign that one can manage and repay a higher credit. On the other hand, delayed or outstanding payments can cause banks to reject a request outright, as it shows the customer will likely fail to repay the borrowed amount.
Improving the Credit Utilization Ratio
The credit utilization ratio is the amount of money one borrows from the total sum to which they have been provided access. Maintaining a low credit utilization ratio is generally advisable, meaning one should borrow as little as possible even though they are eligible for a lot of credit. The ideal target should be around 30% of the total accessible credit. Low credit utilization is a sign of responsible credit management and can increase one’s chances of getting approved for a credit limit increase.
Ways to Request Higher Limits
Customers who wish to increase their credit card limit can make a request online or call the lender via phone.
Request a Credit Increase Online
Clients who have maintained a steady and reputable credit score for several months can make a request online to their card company or bank to boost their credit card limit. Normally, card issuers offer a menu option to request a credit increase once clients log into their online credit card account. Sometimes, the bank may ask for additional information through a secure message or phone. Normally, it takes clients just a few clicks online to submit their information.
Request a Credit Increase via Phone
Clients unsure about their eligibility to receive a boost in their credit card limit can contact their card issuer and speak with a representative. A phone call helps clients provide more information than what could be provided to the card issuer through online forms.
People who need a credit increase urgently can use this alternative. Speaking with an associate on the phone helps expedite the information collection process, and clients do not need to wait for follow-ups.
Online vs. Phone Request – Which is Better?
Online requests for credit increase (known as hard inquiries) are recorded on one’s credit report, meaning they are visible to all lenders. These inquiries also tend to temporarily lower a client’s credit score by a few points, especially if their application is rejected. That’s why only customers with the strongest case for a credit increase should use this online alternative.
Phone calls (soft inquiries) are not visible to other lenders who evaluate one’s credit report and do not affect one’s credit score. This method of inquiry is suitable if someone is unsure whether they will be approved for a higher credit limit.
In either case, if a customer’s application for a credit increase gets rejected, there may likely be a waiting period before they can apply again. If one’s application is accepted but they need more credit later, financial experts recommend waiting for at least six months before asking for a credit limit raise again.
Benefits of Increasing Credit Limit
Increasing the credit card limit has several advantages.
Ability to Make Bigger Purchases
When a person’s credit card usage limit is restricted, they cannot make large purchases such as personal vehicles and property. An increased limit helps people broaden the scope of what they can afford using their card.
Opportunity to Boost Creditworthiness
A person’s credit score changes depending on whether they repay their credit card bills on time. A higher credit limit creates greater opportunities for clients to make repayments, which, in turn, boosts their credit score, creditworthiness, and, by extension, their likelihood of getting further credit boosts down the line.
Things to Consider When Increasing Credit Limit
While boosting one’s credit card limit is useful, one must consider a few important things before applying for this benefit.
Temptation to Overspend
Access to greater credit can cause a cardholder to go overboard when shopping. They may end up overspending, ultimately leading to debt and financial uncertainty.
Credit Inquiries Can Affect Credit Scores
As implied earlier, too many failed credit-boosting inquiries can affect a person’s credit score and their potential to get loans and other benefits from the card issuer in the future.
