Looking to increase the credit limit on your credit card? It won’t take much effort on your part.
If approved, you will have more purchasing power. And your score could improve if you refrain from using the additional credit that’s granted to you.
Read on to learn more about the benefits of credit limit increases.
The Benefits of a Credit Limit Increase
There are two primary perks of credit limit increases.
For starters, a higher credit limit can come in handy if you need to make a big-ticket purchase soon. You can take advantage of the buyer protections offered by major credit card issuers. Plus, you will have more time to come up with the cash to fund the purchase.
Be mindful that failing to repay what you spend before the grace period ends means you’ll pay interest on the purchase. Also, your credit utilization could increase and hurt your credit score.
What if you get a credit limit increase and don’t make any additional purchases? You could see an improvement in your credit scores as your utilization will be lower. To illustrate, assume your credit limit on all your credit cards is $5,000, and you have an aggregate outstanding balance of $2,500. This means your credit utilization ratio is 50%.
If you request an increase that results in an additional $4,000 of available credit, your credit utilization will drop to 27%, which is good news for your credit score. You should also aim for a ratio of 30% or low, and requesting a credit limit increase can help you get there without having to dole out a wad of cash to pay down your credit card balances.
How to Get a Higher Credit Limit
Applying for a higher credit limit only takes a few minutes of your time. Here’s how to get started.
Call your credit card issuer.
You can find the customer service number on the back of your card or on the credit card issuer’s website. Ask the representative to initiate a request for a credit limit increase on your behalf. They will check in the system to determine if you automatically qualify or manually submit a request in the system. In most instances, you will receive an answer in minutes.
Submit a request online.
Prefer not to call the customer service? Log in to the online dashboard and submit your request for an increase there. You will be prompted to answer a few questions before your inquiry is processed. The credit card issuer will also want your updated income information on file. It may take a few business days to receive a response.
Monitor the online dashboard.
There’s a chance you will login to the online portal one day and be offered a credit limit increase. While it’s impossible to time these occurrences, you can ask the credit card issuer how often they evaluate cardholders for increases. This will give you a better idea of when an offer may appear.
Should You Apply for a Higher Credit Limit?
It depends. If your score has increased since you opened the card and you’ve maintained a positive payment history, your approval odds may be high. So, it’s worthwhile to apply to improve your score.
But it’s probably not in your best interest to apply for an increase if you struggle to control your spending or frequently resort to credit cards to hold you over until the next payday.
Also, be mindful that credit limit increases sometimes trigger hard credit inquiries. Why so? The credit card issuer may access your credit report, which can decrease your credit score by up to 5 points.
A Word of Caution
Credit limit increases can be beneficial if you manage your credit cards responsibly. However, you can rack up additional debt if you take advantage of the increase and fail to pay down the balance promptly.
Maybe you recently tried to increase your credit limit but were denied? Consider a 0% APR cash advance from MoneyLion to access up to $250 with no credit check. It’s free to use the Instacash feature, and you won’t have to worry about forking over a fortune in interest in fees.
If you were denied a credit limit increase due to recent credit challenges, it might be worthwhile to apply for a Credit Builder Loan from MoneyLion. You can get up to $1,000 in your pocket right away and rebuild your credit as payments are remitted. There are no credit checks, so your score won’t be impacted if you apply.