Does your current credit limit not fit what you need from your credit card? Or are you looking to increase your credit score by getting more available credit on your accounts and lowering your credit utilization? If so, you may want to look into increasing your credit limit. Here’s how you can do that and how to determine if it is the right move for you.
Many See their Credit Limits Automatically Increase
Many borrowers will see the credit limit on their credit cards automatically increase. This may happen yearly or on a different schedule. Whether or not the lender decides to do so can depend on a few different factors, including your repayment history, spending, current credit score, and how long your account has been open.
If your credit limit doesn’t automatically increase though, you shouldâ€¦
Request an Increase to Your Credit Limit
In some cases, you may have to ask your lender specifically to increase your credit limit. Many banks, credit unions, and lenders have this form right online. You may be asked for updated income information or other financial details.
If there is no online form, call the number on the back of your card. They can help you fill out the request.
If they deny your request though, that doesn’t mean you don’t have options. You may have toâ€¦
Apply for a New Credit Card
If your credit card lender denies your request for an increased limit, you may want to apply for a new credit card. This can be a better option in general as credit card companies tend to offer introductory periods with 0% APR or low transfer fees. However, if poor credit or a poor repayment history kept you from getting a credit increase, you could find it difficult to get approved for a new card, too.
Should You Increase Your Credit Limit?
Before you request that credit limit increase, it’s important to determine whether or not it’s the right decision for your finances. If you have a hard time keeping up with your payments or you’re overspending, it could simply get you in more debt and trouble. Go over your budget carefully before making this decision.
However, if you’re responsible with your money, opting for a higher credit limit can lower your credit utilization. This in turn can help to increase your credit score!
A credit limit increase isn’t a good idea for everyone. It’s important to always be responsible with your money and spending, especially on credit cards. Generally, it’s recommended that you pay off your card every month in order to increase your credit score and keep your debt to income ratio low. If you do have to spend money on your credit card, try to keep it to 30% or lower. But if a credit limit increase is necessary for you, talking with your lender is a great place to start.