If you are looking for how to increase your credit limit, this article is for you. Getting a higher credit limit can reduce your credit utilization thus improving your credit score.
There are also some factors you need to consider before you request a limit increase. If you want to find out more about this topic, read on.
How to Increase Credit Limit
Getting a Credit limit increase can affect you positively or negatively. If you want to lower your Credit utilization, you should increase your credit line. When you request a Credit Line Increase to cover financial emergencies, it may affect you negatively in the long run.
Also, a request to improve your credit limit may affect your credit score since it could initiate a hard pull on your credit report. Also, applying for a limit increase will not be a bad idea if your income has been increased. Having known this, you should be able to tell if you really need a credit limit increase.
What is a Credit Limit?
The term credit limit is associated with credit cards. A credit limit is simply the maximum amount of money your credit card lender permits you to spend on your card. Your credit limit is always stated on your monthly statement or your account. You can also get this limit by contacting your credit card issuer.
To maintain a good credit score, you need to use at most 30% of your credit limit. Using at most 30% of your credit limit lowers your credit utilization.
Your credit utilization is calculated by dividing the balance on your credit card by the credit limit on your card. It is expressed in percentages and is used by most lenders to determine if you can pay off your balance.
How to Get a Higher Limit on Credit Card
Before you apply for a credit limit increase, ensure you have a good to excellent credit score and evidence that you can afford the higher spending limit you are requesting. Also note that your credit limit will be determined by some factors such as your current income, debts, credit history, and your assets. To get a credit limit increase, you can do one or more of the following:
- Request a Limit increase online. If you have a credit card account online, you can sign in to your account to request a limit increase. Most credit card issuers provide an online form for cardholders who want to request an increase.
- Contact your credit card issuer. If there is a phone number printed on the back of your card, you can call the number. When you call the number, ask the representative if you qualify for a limit increase. You may be asked for your income information.
- Lastly, you can apply for a new credit card. This should only be done if you have a good payment history. When you apply for a new credit card with a higher limit, it increases your available credit.
Always ensure you keep your income information updated as most credit cards review this info regularly. If you qualify, your credit card issuer will increase your limit automatically.
Why Did My Credit Limit Increase Automatically?
Your credit limit increased automatically because you qualified for it. This happens because card issuers review the accounts of their cardholders from time to time. This review usually takes place every 6 to 12 months. With this, they are able to detect cardholders that are eligible for a limit increase. Cardholders that qualify for the limit increase usually have a good credit score, income, and payment history.
Does Requesting a Credit Limit Increase Hurt Score?
Requesting a credit limit increase may affect your credit score. When you ask for a limit increase, your credit card issuer will carry out a hard pull on your credit report. This is to ensure that you meet the requirement for a higher limit. This hard pull will reduce your credit score.
However, some card issuers have a unique standard for reviewing your request for a claim. They may not check your credit report before approving your request. With this, your credit score will not be affected.
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