There are many reasons to ask for a credit limit increase. Or, you may be looking to lower your credit utilization to boost your credit score and get a new rewards credit card.
Regardless of why you want to increase your credit limit , you may be wondering when is the right time. Your credit limit is the maximum amount of credit your financial institution is willing to extend to you on a particular credit line. In other words, your credit limit is the highest balance you can carry on your credit card at any given time — although you may be able to spend over your credit limit in some situations.
The financial institution will set your credit limit when you apply for a new credit card. Your credit limit is based on multiple aspects of your credit history including your income, credit score and overall financial situation. Related: Common credit card mistakes and how to avoid them.
Your credit card issuer sets your credit limit when you apply for your credit card. Some issuers require you to hold a card for a minimum amount of time before requesting a credit limit increase. And some issuers have policies regarding how frequently you can request a credit limit increase. For example, if you have an American Express card , you can request a credit limit increase once your account has been open for at least 60 days. And, in the case of some secured credit cards , the issuer may even move you from a secured credit line to an unsecured credit line.
Related: 5 ways the pandemic is changing how you access credit. Consider the pros and cons of a credit limit increase. On the plus side, a higher credit limit may lower your credit utilization rate if you keep your balance under control, says Bruce McClary, vice president of public relations and communications at the National Foundation for Credit Counseling. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it.
You can figure out your credit utilization rate by dividing your total credit card balances by your total credit card limits. Then again, a higher credit limit could also lead to trouble. This is one step we can definitely help with. Get your free VantageScore credit scores and reports from two major credit bureaus at Credit Karma to help figure out your next move.
Heads up, though: When you request a credit limit increase from your credit card company, it may perform a hard inquiry to determine your eligibility. This can affect your credit scores. A hard inquiry from a credit limit increase request is a normal part of the process of applying for new or additional credit, says John Ganotis, CEO of Credit Card Insider. A hard inquiry remains on your credit reports for approximately two years and may impact your credit scores for one year or more depending on the scoring model used.
Credit can be a useful and essential part of the modern financial world, and your credit limit can be an important factor in demonstrating how responsible you are with credit.
Being sensible with your spending may help increase your credit limit and help improve your credit score , which in turn, could help in future financial matters, such as applying for a loan or mortgage. Sign up now. You can cancel at any time.
Do restrict applications for a higher credit limit When requesting a higher credit limit, a lender will search your credit history which can leave a mark on your credit report. Why Your Credit Limit Matters Credit can be a useful and essential part of the modern financial world, and your credit limit can be an important factor in demonstrating how responsible you are with credit. Click here to read our full advertiser disclosure.
We may receive a commission when you click on links for products from our affiliate partners. Here are some of the best times to ask for a credit limit increase:. To play it safe — here are some of the worst times to ask for a credit limit increase: When you have bad credit: If your credit is bad scores below , there's a slim chance you'll be approved for an increased credit limit.
And if you ask for a credit limit increase that results in a hard pull of your credit, it can ding your score further. A better option is to build your credit and ask for an increase when you have a good credit score. When your income has decreased: A recent layoff, demotion or job switch that resulted in a lower income can hurt your chances of receiving a credit limit increase.
When you maxed out your card: If you're already nearing your current credit limit and carrying a balance month to month, you're not in the best position to ask for more money.
Consider paying off debt first. When you just opened the card or requested a credit limit increase: Many card issuers require you to wait at least three months after account opening before requesting a credit limit increase.
0コメント