How to Increase Your Credit Limit

Posted by: Henry B. | May 05,2008


An increased credit limit is both a blessing and a curse, so be careful.  The good news, the obvious: you’ll have more space on your credit card so you’ll have more freedom to spend.  The bad news: an increased credit limit can feel something like a blank check.  Just because you’ve got a larger limit doesn’t mean you should spend it.

That said, increasing your credit limit can have another bonus: increasing your credit rating.  The goal is to have your credit balance below 40% of your limit, so if you raise your credit limit, you’re balance will be a lower percentage of the limit.  That’s yet another reason to not blow this advantage and put instant charges on your new limit.  There’s some other fine print with this scenario.  If you’ve got ten credit cards and then raise the limit on one, it can actually have the opposite affect: lowering your rating.  More credit means that you’re more of a potential credit risk.  How your rating is calculated depends on your credit history and your number of outstanding loans.  

All that out of the way, most everyone wishes that they had more space on their credit cards, if only for the comfort factor.  It’s just good to know that you have the option – especially important in times of emergencies.  Here’s how you raise your credit limit:

1. Ask.  Yep, it’s as simple as that.  Call up your credit card issuer and ask for an increase.  Remember, you’re credit card company wants you to have more money to spend on your credit card because it means more money for them through interest.  You can’t, however, ask for an increase every three months.  Nor can you expect an increase if you’ve defaulted continuously.  
2. So, to raise a credit limit you’ve got to pay your bills on time for an extended period.  If you’re denied for a limit increase, you’ll probably be told, “Pay your bills on time, and above the minimum, for six months, then call us back.”
3. In that time, don’t go over the limit on your credit card – it proves your credit worthiness.  
4. Use your credit cards and pay them off.  Just letting your card sit there four six months, unused, doesn’t show your ability to pay off a limit.  At the same time, buy small – rather than adding a large new balance that will be hard to pay off.  
5. Reduce other types of bills as well – student loans, car loans, mortgage, etc.  Anything that makes you a higher credit risk will make it harder for you to secure a higher credit limit.  
6. Apply for a new card.  This might be seen as a last resort – or a first resort, depending on how many cards you already have.  You don’t really want more than five, but if your current issuer won’t raise your limit, apply for a new credit card.  It’s easier to raise a credit limit with a new card, rather than an old one with an outstanding balance.  

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