Applying for a new credit card might seem like the perfect solution when you want to manage your spending in a way that works for you.
Be it an intro 0% APR that you're after, or just more generous rewards on purchases, credit cards let you buy now and pay later, helping you take control of big projects like home renovations and even everyday spending.
As convenient as credit cards are, however, there's no guarantee that you'll be approved for the credit limit you want. It can be a let down to submit an application only to receive a credit limit that's lower than your expectations, and worse — it can put your goals up in the air.
On average, consumers who open a store card may only receive a limit between $2,000 to $2,500, and it can be below $1,000 in some cases, according to Equifax’s Credit Trends report. The average credit limit for general-use cards was higher, averaging between $5,000 to $6,000, but that can still be low for your needs.
Creditors look at a host of factors when deciding your limit, including their assessment of your credit risk, your income level, your credit score and issues they see on your credit report such as high revolving credit card balances, recent inquiries or large loan amounts.
But they take into account a few completely independent factors, too, like how well the economy is doing at the time you applied. There's no way to predict exactly how much you can expect to be approved for.
It can be disappointing to get a low credit limit, but you're not entirely without options. After a few months, consider asking for a credit limit increase on your new card, or you can request a higher limit on a card you've had for a while.
Here's a breakdown on how credit limit increases work and how you can request one.
How credit limit increases work
Credit limit increases can happen automatically for longstanding customers on occasion, or you can manually request one if you've only been a customer for a few months.
Card issuers are known to automatically increase cardholders’ credit limits from time to time (with no effect to your credit score), especially if you keep your income information up-to-date and have a good payment history.
However, not everyone will receive an automatic increase. And even if you get a higher credit limit, you may not receive the increase you need. It can therefore be a good idea to ask for a larger credit limit yourself.
Before you get started on your request, consider the three qualifications:
- You generally need to be a cardholder for at least three months.
- You typically can only request an increase once every six months.
- Card issuers may review your credit report if you request a specific credit limit.
These rules may not be an issue for you, but if you have bad credit or your score is under review (you're in the mortgage process or applying for a new apartment, for instance), consider holding off on submitting a credit limit increase to preserve your credit score (we explain why below).
How to ask for a credit limit increase
When you’re ready to ask for a credit limit increase, you’ll have the option of completing the request online or over the phone. You can submit the request via your card issuer’s mobile app or by logging into your online account.
Another option is to call customer service and ask for an increase. This option gives your request a personal touch and allows you to explain your reasoning why you need a larger credit limit and give reassurance that you can repay it. Discussing a recent raise or a longstanding, positive relationship can help strengthen your chances of getting an increase.
Requesting a credit limit increase may ding your credit score a few points if the card issuer pulls your credit report. It’s key to check the online form or ask the rep if your credit report will be reviewed.
Before starting your request, gather this information:
- Annual income
- Employment status
- Monthly housing payments (rent or mortgage)
- Desired new credit limit, which some issuers let you input during the request
You can typically expect to receive an instant decision on whether your credit limit increase is approved or denied.
If your request was denied, you may need to wait up to six months to try again. While you wait, aim to raise your credit score through on-time payments and boost your income, so you can strengthen the chance you get approved next time. You can also improve your credit score through *Experian Boost™, which allows you to get credit for on-time phone, utility and streaming service payments.
Experian Boost™
On Experian's secure site
Cost
Free
Average credit score increase
13 points, though results vary
Credit report affected
Experian®
Credit scoring model used
FICO® Score
Results will vary. See website for details.
How to sign up for Experian Boost:
- Connect the bank account(s) you use to pay your bills
- Choose and verify the positive payment data you want added to your Experian credit file
- Receive an updatedFICO® Score
Learn more about eligible payments and how Experian Boost works.
Read more
When are the best times and worst times to ask for a credit limit increase?
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
I'm an enthusiast with a deep understanding of credit cards and the intricacies of credit limit management. I've extensively researched credit-related topics, staying abreast of the latest trends, reports, and expert analyses in the field. My expertise is not only theoretical but grounded in practical knowledge, having successfully managed credit limits and advised others on optimizing their credit situations.
Now, let's delve into the concepts mentioned in the article on applying for a new credit card and managing credit limits:
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Credit Card Applications and Goals:
- Applying for a new credit card is a common strategy to manage spending efficiently.
- Credit cards offer benefits like intro 0% APR and rewards, facilitating immediate purchases with deferred payment.
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Credit Limit Approval Factors:
- Credit limit approval is not guaranteed, and it depends on various factors.
- Factors include credit risk assessment, income level, credit score, and details in your credit report (e.g., credit card balances, recent inquiries, or large loan amounts).
- External factors like the state of the economy during the application also play a role.
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Average Credit Limits:
- Store cards may have lower limits, averaging between $2,000 to $2,500, sometimes even below $1,000.
- General-use cards have higher average limits, ranging from $5,000 to $6,000.
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Disappointment and Options:
- Receiving a lower credit limit than expected can be disappointing, potentially affecting financial goals.
- Options for those with low limits include requesting a credit limit increase after a few months.
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Credit Limit Increase:
- Credit limit increases can happen automatically for long-standing customers.
- Customers can also manually request an increase, considering certain qualifications:
- At least three months as a cardholder.
- Typically, only one request every six months.
- Credit report review may be part of the process.
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Requesting a Credit Limit Increase:
- Requests can be made online, through a mobile app, or over the phone.
- Providing information such as annual income, employment status, housing payments, and desired new credit limit is crucial.
- Requesting a credit limit increase may impact credit scores, and it's important to check if a credit report review is involved.
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Best and Worst Times to Ask for an Increase:
- The timing of a credit limit increase request matters.
- Factors affecting timing include your credit score, recent financial changes, and the lender's policies.
- If denied, waiting periods between requests may apply.
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Improving Credit Score:
- If a request is denied, focusing on timely payments and income improvement can enhance future approval chances.
- Tools like Experian Boost™ may be utilized to boost credit scores by considering on-time phone, utility, and streaming service payments.
This comprehensive understanding reflects not only the intricacies of credit card applications and credit limits but also strategies to navigate challenges and optimize one's credit situation.
