A card issuer typically won’t allow you to set your own credit limit, but it may be willing to entertain requests for a higher credit line after you have established a relationship.
Are you always running close to your card’s credit limit? Do you wish that you could get a bigger line of credit?
Reader Scott’s query is along such a line. He says the line of credit his card issuer assigns him is never high enough, which leaves him wondering if it is possible for him to pick his own credit line, rather than let the card issuer assign him one.
Setting the limits
A card issuer is essentially giving you a personal line of credit, based on your creditworthiness. This means it will look into aspects such as your income, how much debt you already have and how responsibly you have used your credit in the past.
You should also expect it to look into your credit reports and credit scores. All this will enable your issuer to determine how much credit to extend to you. The higher your income, and the lower your current debt levels, the better the line of credit you are likely to receive, subject to a favorable credit report.
There are also a few cards that have no preset spending limits on your purchases, including charge cards, which have to be paid in full every month. These tend to be available to more creditworthy consumers. Of course, this is not going to be of use to you if you are among the many credit card users who typically carry a balance.
If it’s any consolation to you, card issuers are likely to entertain requests for higher credit lines after you have been using the card for a while, so that they have a better idea about your financial picture.
Bank of America, for one, allows you to request a specific line of credit on your card once you have established a relationship with it, according to a spokesperson for the bank. However, the issuer doesn’t allow you to pick a specific line tailored to your requirements at the time of applying for the card.
See related: How do banks determine a credit card’s credit limit?
Keep your credit score in mind
Scott, considering that you see your credit line as never being high enough, you should be also careful about your credit utilization. This refers to the total amount of credit that is available to you that you use.
The more of the credit available you use, the higher your credit utilization, which makes up 30 percent of your credit score under FICO’s traditional model. Credit bureaus tend to look more favorably on you when you use a lower amount of the total credit that you have available.
That’s why it’s also usually better not to close any existing card accounts, even if you don’t use them. Closing an account can lower your total credit available, so that your credit utilization goes up, depending on how high the balances are on other cards you own.
Use your credit judiciously
Given that you typically have no choice in terms of setting a credit line when you apply for a card, it seems your best line of defense would be to use your card judiciously so that you don’t run over your credit limit.
If you run over this limit, the transaction is not likely to go through. The Credit CARD Act requires you to opt-in to pay an “over the limit” fee for the transaction to go through. Moreover, the law only allows one such “over the limit” transaction per billing cycle. And you can opt out of this arrangement at any time.
There are also issuers, such as American Express, that allow you to check your spending capability before you use your card. That way you can verify ahead of making a purchase whether your charge will go through.
Scott, if you use your card prudently and establish yourself as a responsible borrower, you could then approach your card issuer to request a higher credit line.