If you’re a responsible borrower, increasing your credit limit is one way to elevate your purchasing power. Plus, paying your bills on time and in full every month will let you reap the benefits of excellent credit. You’ll get the peace of mind that comes with having plenty of breathing room to cover unexpected bills, too!
But if you struggle with overspending and managing your debts, accessing more credit may be an unbearable temptation. That’s why it’s important to know how to increase your credit limit if you need it as long as you can handle the responsibility.
Why increase your credit limit?
Raising your credit limit comes with a few notable perks. Let’s take a look at the top three best advantages of increasing your credit limit.
Make bigger purchases
For starters, a higher credit limit comes in handy when you want to make big-ticket purchases, especially if your card offers buyer protection. Plus, you’ll be able to pay off your bill over time. Plus, say hello to cardholder rewards!
Failing to repay your debt in full every month will mean that you’ll owe interest, which ultimately adds to the final cost of what you owe in the long run. Using a large percentage of your overall limit can hurt your credit score, too.
Lower your credit utilization
That brings us to the second benefit of raising your credit score. When your credit limit goes up, your credit utilization, which is the amount you borrow compared to your credit line, will go down, assuming that you don’t make any larger purchases.
Let’s take a look at a quick example. If your credit limit is $100, and you spend $50 on groceries, your credit utilization is 50% because you are using half of your available credit line.
From a lender’s perspective, a high utilization rate suggests that you could be overextended, which puts you at a higher risk of default. And when it comes to your FICO score, credit utilization comprises about 30% of your total score calculation.
But raising your credit limit automatically lowers your utilization because of the fact that you now have more debt to borrow against. Typically, lenders like to see credit utilization below 30% but remember that credit utilization below 10% is even more ideal.
Achieve better rates for your future
Boosting your credit limit also comes with the perk of having access to better lending terms in the future. By raising your credit score now and maintaining positive financial habits over time, your credit report will show that you’re a responsible borrower worthy of better interest rates and bigger loans.
How to apply for a credit limit increase
You can go about applying for a higher credit limit in one of two ways. The first option is to call the customer service number that is either located on the back of your credit card or on the card issuer’s website.
Ask the representative to initiate a credit limit increase request. They’ll check the system to determine whether you automatically qualify or if they’ll need to manually submit a request. Most of the time, you’ll receive an answer within minutes.
If you’d prefer to not call customer service, you can log in to the online dashboard on your desktop or mobile app and submit a request on your own. You may have to answer a few questions about your income before you find out if you qualify for an increase. You might not hear back as quickly when you go this route, but a response should come within a few days at the most.
4 additional ways to boost your credit limit
Applying for an increase isn’t the only way to boost your credit limit. There are four other great ways to go about boosting your credit card limit!
1. Wait for them to come to you
Occasionally, your credit card issuer might reach out to you with a limit increase offer. While it’s impossible to time if or when this will occur, you can ask your issuer how often they evaluate cardholders for potential limit raises.
2. Pay off your debts
Paying off your debts and keeping your credit utilization low is another way to potentially increase your credit limit. If your bank notices that you are able to maintain a low debt-to-income ratio, they may raise your limit without requiring a request.
3. Apply for another credit card
If you’re good about making on-time payments and keeping your credit score up, you might want to consider applying for a new card. Even if your limit isn’t raised, your available credit will still skyrocket automatically. But be careful not to apply for new cards too often as credit-seeking behavior is a red flag for lenders.
4. Become an authorized user
If you don’t want to open another credit account in your name, you might think about asking your parents, partner, or friends if you can join their account as an authorized user. Just be sure not to tank their credit!
Should you apply for a higher credit limit?
Whether or not you should increase your limit is not the same as whether or not you can. If you’re typically responsible with your credit and you have a solid credit history, your approval odds will be high. Applying may be worthwhile just to improve your score, even if you never make use of the extra credit.
However, if you struggle to control your spending or you frequently resort to using your credit cards to make purchases, a higher credit limit might not be in your best interest. You should also be mindful of the fact that applying for extra credit or a new card can trigger a hard credit inquiry, which may decrease your credit score temporarily.
While an excellent credit score can withstand the occasional inquiry, asking for more credit might push a teetering score well over the edge.
Can’t increase your credit limit? Try an InstacashSM advance!
A credit limit increase can be beneficial if you manage your debt responsibly. But if you fail to pay your balances or you find yourself taking advantage of your newly increased limit, it might be time to reconsider whether such a high credit limit is worth the risk.
If you’ve recently tried to raise your limit but you were denied, Instacash has your back. You can get up to $250 without having to accept a hard credit check. Plus, there’s no interest and no monthly fees with Instacash.
And let’s not forget about the MoneyLion Credit Builder Plus membership. For just $19.99 per month, you could put up to $1,000 in your pocket and rebuild your credit by up to 27 points within 60 days like more than half our members.
The MoneyLion Credit Builder Plus membership also comes with:
No hard credit checks
Tools like Financial Heartbeat® to keep you on track
Spend report tracking to manage your finances
The chance to win monthly rewards, including a membership fee refund up to $19.99!
Download the MoneyLion App and get your financial future back on track!
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Disclosures
Instacash® is an optional service offered by MoneyLion. Your available Instacash Advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors, as determined by MoneyLion. Expedited delivery requires Turbo Fee. See Instacash Terms and Conditions for more information and eligibility requirements.
Credit Builder Plus membership ($19.99/mo) unlocks eligibility for Credit Builder Plus loans and other exclusive services. This optional offer is not a Pathward product or service. A soft credit pull will be conducted which has no impact to your credit score. Credit Builder Plus loans have an annual percentage rate (APR) ranging from 5.99% APR to 29.99% APR, are made by either exempt or state-licensed subsidiaries of MoneyLion Inc., and require a loan payment in addition to the membership payment. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account maintained by ML Wealth LLC and held by Drivewealth LLC, member SIPC and FINRA. The funds in this account will be placed into money market and/or cash sweep vehicles, and may generate interest at prevailing market rates. You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states. Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.
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Credit score improvement is not guaranteed. Credit scores are independently determined by credit bureaus, and on-time payment history is only one of many factors that such bureaus consider. Your credit score may be negatively impacted by other financial decisions you make, or by activities or services you engage in with other financial services organizations. MoneyLion is not a Credit Services Organization.
Credit score improvement is not guaranteed. A soft credit pull will be conducted that has no impact to your credit score. Credit scores are independently determined by credit bureaus. Data was sourced from credit score data from over 147,500 Credit Builder Plus members with an active loan between January 1, 2020, and March 15, 2023. Credit score improvement is not guaranteed. Credit scores are independently determined by credit bureaus. MoneyLion is not a Credit Services Organization. Credit Builder Plus is an optional service offered by MoneyLion.
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Credit score improvement is not guaranteed. A soft credit pull will be conducted that has no impact to your credit score. Credit scores are independently determined by credit bureaus. Data was sourced from credit score data from over 147,500 Credit Builder Plus members with an active loan between January 1, 2020, and March 15, 2023. Credit score improvement is not guaranteed. Credit scores are independently determined by credit bureaus. MoneyLion is not a Credit Services Organization. Credit Builder Plus is an optional service offered by MoneyLion.
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Instacash is a 0% APR cash advance service provided by MoneyLion. Your available Instacash advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors as determined by MoneyLion. This service has no mandatory fees. You may leave an optional tip and pay an optional Turbo Fee for expedited funds delivery. For a $40 Instacash advance with a Turbo Fee of $4.99, your repayment amount will be $44.99. Generally, your scheduled repayment date will be your next direct deposit date. An Instacash advance is a non-recourse product; you will not be eligible to request a new advance until your outstanding balance is paid. See Membership Agreement and help.moneylion.com for additional terms, conditions and eligibility requirements.