credit limit increase

A higher credit limit can come in handy in a number of ways. It can help you pay for something in an emergency, allow you to make large purchases you require, and even improve a credit score.

Asking for a higher credit limit, however, can seem awkward.

You might worry that asking for more credit may make you look like a poor credit risk and that you’re in dire need of money. Or maybe you’re unsure how to ask for it.

While consumers with low credit scores can’t get the highest credit limits available, they can still receive higher credit limits under certain circumstances.

How credit limits are set

The highest credit limits are most likely to be offered to people with the highest credit scores for a simple reason — they’re considered the most likely to pay their credit card bill on time and not default. Someone with a low credit score will have a harder time convincing their credit card company to give them a higher credit limit, though it’s not impossible.

The average credit limit as of December 2016 was $8,071, according to data from Experian, a credit bureau.

The higher a person’s credit score, the higher their credit limit. Here are the average credit limits for the credit scores Experian uses, from highest to lowest:

  • SuperPrime credit score of 781 or higher: $11,357 credit limit.
  • Prime score of 661-780: $7,593.
  • NonPrime score of 601-660: $4,674.
  • SubPrime score of 500-600: $2,645.
  • Deep SumPrime sure of 300-499: $1,834.

The good news is that credit limits increase with age. People typically earn higher salaries and pay down their debt later in life, which can improve their credit score.

Improve credit score with higher limit

Financing large purchases such as home renovations or covering monthly expenses may be the most pressing needs to ask for a higher credit limit, but there’s another advantage to seeking a credit limit increase — it can improve your credit score.

A credit limit determines a credit utilization ratio, and a lower ratio can lead to a higher credit score. The credit utilization ratio is the ratio of credit you use to your credit limit. A rate of 25 percent is best to improve a credit score, meaning you’re using up to 25 percent of the credit available on the credit card.

Just as adding another credit card to your wallet will increase this ratio, so will increasing the credit limit on a card you already have — as long as you don’t spend that extra money that’s available.

Of course, that may be counterintuitive to why you’re asking for a credit limit increase in the first place. You need the extra money and plan to spend it, and aren’t too interested in improving your credit score or utilization ratio.

How and when to ask for a higher limit

Whatever you need the money for, you’re more likely to be approved for a higher credit limit if you have a strong credit score and no recent history of late payments.

That’s because your inquiry will be treated as if you were applying for a new credit card. The card issuer will make an inquiry into your credit score to determine your credit worthiness.

Pick only one credit card in your wallet to ask for the higher limit on. Don’t ask all of your credit card issuers for a higher credit limit, since each will be treated as a separate inquiry that could hurt your credit score. Asking many creditors for more creditors could be seen as a sign of desperation and could hurt your chances for approval.

It can also help not to apply for new credit cards in a short period of time when asking for a credit limit increase on an existing card. Such applications can lower a credit score temporarily.

Also lower the amount of debt owed before asking. Again, this may be difficult if you’re already at your credit limit and need more money immediately, but using less of your credit limit will improve your credit score and increase your chances of getting a credit limit increase.

To ask for a larger credit limit, just call your credit card provider and ask for it. Ask them to consider your years of membership, strong payment record and low credit utilization rate.

If your household income has gone up since your credit line was last extended, inform them of the increase.

If you have a low credit score, you can still ask for a higher limit, though it might not be as much as you’d like. If it’s an emergency, such as you need more credit to pay a car repair bill so you can get to work, that may be all that’s needed.

Don’t be desperate or greedy

Banks like to loan to people who don’t really need money. It’s seems like a Catch-22, but it’s how they do business.

In telling a bank representative a sob story of why you need money — such as the above tale on a broken car — you may get the higher credit limit, but that excuse will only work so many times.

A better method is to tell them why you deserve more credit: You’ve never missed a payment, you always pay your balance in full each month or more than the minimum balance, and your payments are always on time.

You also don’t want to ask for too high of a credit limit. This can be a sign of greed and desperation, which can lead to denial and require you to wait a few months before applying again for a credit limit increase.

Don’t ask the credit card company how much you should ask for. Aim for 10 to 25 percent more, up to $250 for every $1,000 in credit you already have. If you have good credit, you may be able to ask for more.

Wait six months, or don’t

If you don’t need the extra credit immediately, wait six months, which is how often credit issuers usually review accounts. You can then either ask for an increase, or you may receive one automatically if your account is in good standing.

During that wait, be the best customer you can be by paying your credit card bill on time and in full.

Another option is to apply for a new credit card with a new company or your current lender. If you’re approved for a new card with your existing lender, ask that part of your new credit line be reallocated to the card you originally wanted to be increased. You’ll likely need good or excellent credit to do this.

If you do get a higher credit limit and use it, be sure to pay the bill in full when it comes due so that you don’t have to pay interest charges. Don’t use a higher credit limit as an invitation to spend more money, especially if you can’t afford it.