iQuanti: Your credit limit is the maximum balance you can put on a credit card. It can affect your spending habits — if your income has increased, your credit cards may no longer have a high enough limit for your spending.
Plus, your credit limit has an impact on your credit score. Increasing your credit limit relative to your spending can reduce your credit utilization, boosting your score.
Wondering how to increase your credit limit? Read below to learn three strategies.
1. Get a New Credit Card
Getting a new credit card will give your total credit limit a large increase right away. Plus, it could expand your credit mix — another factor that impacts your credit score. What's more, new credit cards often come with great offers for cardholders, which can be another advantage to having multiple cards in your wallet.
However, don't apply for new credit cards too often. Each application triggers a hard inquiry (a formal credit check). This lowers your score temporarily. If you have too many in a short timeframe, a lender might deny your application for a new card.
2. Request an Increase
If you don't want a brand-new credit card, you can ask your lender to increase your current credit limit. You can either make a request online or call the number on the back of your card and ask for an increase.
This method may work better if you want to minimize the number of cards you have to manage. Similarly, you may want to request an increase instead of getting a new card if you use a particular card for most of your spending.
Now, requesting an increase triggers a hard inquiry, just like applying for a credit card. Therefore, you should only request increases sparingly — even across different card companies. They'll see your previous hard inquiries and potentially deny you if there are too many in too short a timeframe.
Additionally, make sure you update your income with your issuer before requesting. A higher income can improve your approval chances.
3. Wait for an Automatic Increase
Your credit card company may review your account every so often — usually bi-annually or annually. They may grant an automatic increase if you have a strong payment history and your credit score has increased.
Regardless, there's no risk of a hard inquiry or getting denied. Instead, the lender conducts a soft inquiry (they can't make a hard inquiry without your consent) and will raise your score automatically if you meet their criteria. That makes waiting the safest method.
Again, make sure you regularly update your income and other financial information with your card company. If your income has increased since you opened the account, your chances of getting an automatic increase could improve.
Grow Your Credit Limit and Help Your Score
Getting a credit limit increase is a great milestone in your financial journey. It indicates you've used your cards responsibly and can manage debt well.
Those positive habits feed right back into your credit score, too. Each time your limit increases, your score could go up alongside it — helping you climb the financial ladder and reach your goals.
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Original Source: 3 Ways to Boost Your Credit Limit
