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Should I Ask for a Credit Limit Increase?

All new credit cards come with a credit limit, which is the amount you can charge up to on that card. Depending on the type of credit card and your credit history, the credit limit may be anything from a few hundred to many thousands of dollars. After you’ve used the card for a while, you may find yourself thinking you’d like to have a higher limit, but should you ask for one? Let’s take a look at some things to consider.

woman on the phone asking for a credit limit increase

How Do Credit Limits Affect Credit?

Your credit utilization counts as 30% of your credit score. It’s the percentage of total available credit available you have in use at any given time. Ideally, creditors like to see a credit utilization rate of 30% or less. The higher your credit limits are, the higher your total available credit will be. But as your credit limits increase, so does the temptation to spend.

Do Credit Limit Increases Happen Automatically?

Many credit card issuers regularly review customers’ accounts to determine if they want to increase their credit limits. They generally grant credit limit increases to accounts with a positive payment history using only a small portion of available credit. Customers will receive an email and/or text message letting them know their credit limit has increased.

When is the Best Time to Ask for a Credit Limit Increase? 

If you don’t automatically receive periodic increases, the best time to ask for a credit limit increase is when you don’t need one. Here’s why: if you receive an increase, your credit utilization should improve since you’ll have more total available credit. However, suppose you receive an increase and immediately charge up to the new available amount. In that case, you run the risk of hurting your credit. Plus, you’ll be racking up more debt you’ll have to pay off.

Will Requesting an Increase Affect My Credit Score?

If the credit card issuer does a hard pull of your credit when you request an increase, that could result in a drop of a few points in your credit score. However, not all credit card issuers do a hard pull to evaluate a request for an increase. If you’re concerned about the request affecting your credit score, find out from the credit card company what criteria they use to make their decision before you ask for an increase.

What Can I Do to Help Ensure I Receive an Increase?

Several things can improve your chances of receiving an increase, starting with paying your credit card bill on time every month. Ideally, you’ll want to pay the balance in full, but at the very least, pay more than the minimum payment each month. You’ll also want to make sure your personal information is accurate and current, including your income. Finally, regularly review your credit reports to ensure there are no errors, omissions or outdated information you need to address.

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