How to Increase Your Credit Limit: A Comprehensive Guide

At O1ne Mortgage, we prioritize consumer credit and finance education. Understanding how to manage and increase your credit limit can provide you with greater financial flexibility and help you maintain a healthy credit score. In this blog, we will explore the steps to increase your credit limit, the pros and cons of doing so, and answer some frequently asked questions. For any mortgage service needs, feel free to call us at 213-732-3074.

How to Increase Your Credit Limit

Each credit card issuer has its own guidelines for granting credit limit increases. Generally, you should be a cardholder for at least six months and should not have requested an increase in the past six months. Here are three primary ways to request a credit limit increase:

Request an Increase Online or In-App

The most convenient way to request an increase is through the card company’s website or mobile app. If your card issuer accepts online or in-app requests, complete the form and submit your information. This method is quick and allows you to manage your request at your convenience.

Call Your Card Issuer

Alternatively, you can call the customer service number on the back of your card and request a credit line increase. Be prepared to explain why you’re asking for more credit and provide information on your income and housing expenses (rent or mortgage). Your request may be approved on the spot, though some requests take up to 30 days to be processed.

Update Your Income and Wait

Even if you don’t actively request one, you may be offered a credit limit increase automatically if your card issuer reviews your income, credit, and account history and decides to increase your credit line. If your credit card issuer ever requests updated income information, it could be a sign that they’re considering a credit limit increase.

Pros and Cons of Increasing Your Credit Limit

On balance, a higher credit limit has more pros than cons. However, depending on your habits and your ability to control your spending, you may ultimately decide to keep your limit where it is. Here are a few pros and cons to consider:

Pros of Asking for a Higher Credit Limit

Greater Spending Power: You can use your card for larger purchases without worrying as much about your credit. A higher credit limit could also help you maintain a healthy credit utilization ratio, which is a key credit score ingredient that measures how your credit balances compare with your credit limit.

Emergency Backup: Raising your credit limit makes your card more useful, both as a payment tool for making large purchases and as emergency backup when a surprise expense pops up.

Cons of Asking for a Higher Credit Limit

Temptation to Overspend: A higher credit limit enables you to run up a higher balance, which could be difficult to pay off. While a higher credit limit doesn’t cause overspending, it does make it easier to do so.

Credit Inquiries: Hard credit inquiries, like the ones credit card issuers may run when you request a credit limit increase, can decrease your credit score. Although the effect is minor and temporary, it’s a good idea to limit the number of hard inquiries to your credit. This is especially true if you’ll soon be making a major credit decision, such as applying for a mortgage.

FAQs

Will I Get Approved for a Higher Credit Limit?

Approval for a higher credit limit depends on several factors, including your credit score, income, and how well you’ve managed your account. If you’ve demonstrated responsible credit behavior, your chances of approval are higher.

What Should I Do if My Credit Limit Increase Is Denied?

If your request for a credit limit increase is denied, don’t be discouraged. Focus on making your payments on time and paying down your existing debt. As your financial situation and credit improve, you can always apply again.

How Often Can I Request a Credit Limit Increase?

Most credit card issuers recommend waiting at least six months between credit limit increase requests. Frequent requests can result in multiple hard inquiries, which can negatively impact your credit score.

The Bottom Line

If you’re thinking about requesting a credit limit increase, start by checking your credit report and score. If your credit score could use a boost, consider trying tools like Experian Boost® to add on-time rent and utility payments to your score calculation.

Remember, managing your credit responsibly is key to maintaining a healthy financial profile. For any mortgage service needs, O1ne Mortgage is here to help. Call us at 213-732-3074 to speak with one of our experts today.