Considering asking for a credit limit increase just a few months after opening a card? Not so fast. It can backfire and hurt your credit.
If you’ve had a credit card for a while, and if you’ve always paid more than the minimum due and paid on time, you might be wondering when you can ask for a higher credit limit. There are some important things to consider before you do, so keep reading to learn the ins and outs of requesting a higher limit.
When should I ask for a credit limit increase?
Simply put, the best time to ask for one is when your credit is good and you’re making more money than you did before. Asking for a credit limit increase too soon could ding your credit score, so make sure you pay attention to these tips because timing is everything.
- Most card issuers automatically review credit limits after six months.
- Asking sooner than that could be a red flag to your creditor, and you could be turned down. This will be bad for your credit.
- Asking for a higher credit limit could trigger a hard inquiry on your credit reports, something that will almost certainly cause your credit score to drop a few points. Regaining those points will take 12 months, even if you do everything right afterward.
When is not the best time to ask for a credit limit increase?
A bad time to ask for a credit limit increase would be if you’ve recently lost a job or had a drop in salary. In addition, Some other examples of when you shouldn’t ask include:
You’ve asked for one on another card
- Your credit isn’t good or excellent
- You’ve asked for an increase on another card
- You’ve applied for new lines of credit
How to ask for a credit limit increase
It’s easy to ask for a credit limit increase. All you have to do is call the issuer’s customer service department and explain why you want one. You can also do it online. But before you ask, ask yourself the questions below:
- Is there a good reason you want a higher credit limit? You should have a solid reason for asking for a credit limit increase. And it’s not a good idea to ask for one unless you’re able to pay your balance in full each month.
- Are you managing your finances responsibly? If you’re not living within your means, relying on a credit card to get you through is not a sustainable practice. More credit could in fact exacerbate that problem.
- Is your credit in good shape? You will need to be fairly certain that you will not be denied if you do decide to ask for a higher credit limit. This means your credit needs to be in good shape. Check your credit reports for free at AnnualCreditReport.com. You can pull all three reports – from Equifax, Experian and Transunion, the major credit bureaus – at once or you can check one report regularly. This is a good financial practice for everyone.
- Did you find any credit report errors? Get them corrected. Carefully look over your credit report(s) to be sure that all the information is correct. And make sure you dispute any errors you find.
If you decide to move forward, don’t expect to double your credit limit. In fact, you should be prepared to ask for, or be granted, only a 10% to 25% increase at most.
And again: You should have an idea of what you plan to do with the additional credit and share that with your card issuer when you call to ask for a higher credit limit.
For instance, if your card offers rewards, you can say you want to be able to take more advantage of those with the credit limit increase. Or, you can say you have learned a little about your credit score and would like to lower your credit utilization ratio, which is how much you owe divided by your credit limit.
If you’re not successful in increasing your credit limit, keep paying your bills on time and in full, and before you know it you’ll likely be eligible for one.