Tips on Increasing Your Credit Limit

Greater Possibilities 

Credit cards and other lines of credit are great, but over time they can start to show their limitations, specifically the credit limit.  Each credit card or personal line of credit permits only up to a certain amount of money.  However, these limits can be increased over time.  

Sometimes a situation arises where the shortage of credit creates a challenge, or it could just be time to plan, and the greater the credit limit, the more security it gives.  There are various ways to go about increasing any credit limit. 

A Word of Caution 

Before taking such a step, though, the borrower needs to understand exactly why they are trying to increase their credit limit.  If it is because the cards keep hitting the maximum, and they cannot make the payments to lower it, this is not a valid reason to try and increase the credit limit.  Even if the limit is not almost reached, the possibility for more purchases on credit can be a trap that is difficult to get out from under, especially with high-interest rates.  Be sure that charging any purchase is the best decision before doing it automatically.   

Increase the Credit Score First 

Credit increases always take the credit score of the borrower into account. The first step is to make sure the score is as high as possible.  Increasing a credit score can be a long process if the score is low.  It measures how likely a person is to pay back borrowed money.  The best way to increase a low score or keep a good score is to make payments on time.   

Try avoiding borrowing too much at once.  Also, try to avoid too many hard credit checks.  This will happen when applying for new loans or credit increases.  Before making the application for a higher limit, be sure to check the credit statement and make sure that all information is accurate.  A faulty score could lead to a higher interest rate or even a denial. 

Getting the Increase 

There are two normal ways to get a credit limit increase.  The first happens automatically.  Most credit card companies, for example, will review the credit limit of each customer every six months or so.  Then there may be an email requesting more information and for confirmation of the increase.   

The second option is to request an increase.  In many cases, this can be done online, although some financial institutions will require an in-person interview.  Be sure they know how much the increase should be and be prepared for a negotiation.   

Sometimes the best solution is to apply for a new line of credit or card and then offer to transfer the balance to the new credit line with a higher limit.  Just be sure to use credit wisely for a stable financial future and a higher credit score.