There are several reasons you might want to ask your credit card issuer to increase your credit limit. One is that you may be planning some travel or major purchases that could cause you to bump up against your current limit. Another is that you might hope to raise your credit score by improving your credit utilization ratio. That's the amount of debt you have outstanding at any given point compared with the amount of credit you have available to you. A higher credit limit can mean a higher score—as long as you don't go out and charge more than you normally would.
But it's entirely up to the lender whether to grant you that increase. Here's what you need to know about how lenders make the decision to approve a credit limit increase or deny one.
Key Takeaways
- When you apply for a credit limit increase, the lender will usually check your credit report at one or more of the major credit bureaus.
- The lender will most likely also ask you about your current income (which isn't on your credit reports).
- If your request is denied, the lender is required by law to tell you why.
- Typically you shouldn't request an increased credit line more often than every six months, unless you've had a significant increase in your income.
Why Credit Limit Increases Are Declined
When you request a credit limit increase from your credit card provider or other lender, it will review your past payment history both with it and any other financial institutions you have credit accounts with. It will do that by pulling your credit reports at one or more of the three major credit bureaus.
Among the things it will look at are your current credit utilization ratio and your history of past payments. If your credit utilization ratio is high, that could mean you have racked up too much debt already, making you a poor candidate for a credit limit increase. If your credit report shows a number of missed or late payments, that's also a red flag to the lender. One of the most detrimental marks on your credit report would be if you have ever defaulted on a credit card or loan.
A common reason that applicants are turned down for a credit limit increase is insufficient income. The card issuer wants to see an income that can reasonably support the amount of credit you have requested. For example, if you only make $20,000 per year, do not expect your credit limit to be increased to $15,000. Your income is not shown on your credit reports, but the lender will likely have requested it when you applied for the increase.
Important
Because your lenders will look at your credit reports in deciding whether to raise your credit limit, you may want to check your credit reports even before you apply. By law, you can obtain free copies from each of the three major bureaus at least once at year at the official website, AnnualCreditReport.com. If you find any errors that are likely to be detrimental to your application, you should ask the bureaus to correct them.
What to Do if Your Request Is Declined
If your request for a credit limit increase is denied, the lender is required by law to tell you why. This is known as an adverse action notice, and it will usually come in the mail. If, for some reason, you receive no explanation, you should ask the lender. Its customer service reps will either discuss this with you over the phone or, more commonly, send you a letter listing the reason for your denial.
What should you do next? One tactic you might consider if you need more access to credit is to submit a new request for a lower amount. Sometimes the credit card issuer will counter your request and offer a credit limit that it considers acceptable. Alternatively, you might seek out a different issuer that can offer you more lenient terms.
In addition, you probably want to address the issues that the lender said resulted in its denial. For example, if your credit score was too low, you can begin to take steps to raise it. Those including making sure you pay all your bills on time and not using too much of the credit you already have available to you.
Why Would You Be Denied a Credit Limit Increase?
You could be denied a credit limit increase for many reasons, such as a history of late payments, too low of a credit score, too little credit history, too many recent applications, or an inadequate verifiable income. If you were already approved for a credit limit increase recently, that could be another reason.
Does Asking for a Credit Limit Increase Affect Your Credit Score?
That can depend on your credit card issuer. If it does what's known as a soft credit check, it will not affect your credit score in any way. If the company makes a hard credit check, that may lower your score a bit, but usually only temporarily.
How Often Can You Request a Credit Limit Increase?
In theory, you can request a higher credit limit whenever you want. Many card issuers make it easy by allowing for increase requests on their website portals. However, issuers generally say it's best to wait about six months between requests, unless you've had a significant increase in salary in the meantime.
The Bottom Line
Requesting a credit limit increase is common practice, especially if you are new to having credit cards and find yourself well below the average credit limit (currently around $30,000, according to the credit bureau Experian). Before you apply, however, it's worth checking your credit reports so you know what information the card issuer will be using to decide on your request.
FAQs
You could be denied a credit limit increase for many reasons, such as a history of late payments, too low of a credit score, too little credit history, too many recent applications, or an inadequate verifiable income.
Does a credit limit increase request hurt score? ›
If the credit increase is not automatic and you actively request it, expect your lender to conduct a hard credit inquiry. While this could temporarily lower your score by a few points, likely no more than 10, the effect is generally short-lived.
Why do I keep getting denied when I have good credit? ›
You may also have a history of high credit utilization. If you consistently max out your credit cards, for example, issuers may be hesitant to offer you new credit even if you always make your payments on time. Or maybe you've applied for too much new credit within a short time period.
Why did Discover deny my credit increase? ›
If your credit score has fallen since you first applied for the credit card, Discover might not want to raise your credit limit. Likewise, if you've missed payments or have done other things to put your account in bad standing, Discover might not want to take the risk of offering you more credit.
Is there any reason not to accept a credit increase? ›
A higher credit limit can lead to more debt if not used responsibly. If the extra capacity to spend money is there, the temptation may be irresistible. Be sure to follow the number one rule of responsible credit card spending and only make purchases you'll be able to pay off in full by the end of your grace period.
How much of a credit limit increase should I ask for? ›
How much of a credit limit increase should I ask for? Most experts recommend asking for a 10% to 25% credit limit increase. But the amount you're approved for can vary by issuer. If you ask for a higher amount, the issuer may run a hard credit check.
Can I overpay my credit card to increase limit? ›
The maximum amount that can be paid is for the posted balance in full. Pending transactions aren't included because the merchant hasn't collected their funds from the authorization yet. And overpayments aren't guaranteed to create excess available credit.
Why did my credit increase get denied? ›
You could be denied a credit limit increase for many reasons, such as a history of late payments, too low of a credit score, too little credit history, too many recent applications, or an inadequate verifiable income.
Can you have a 700 credit score and still get denied? ›
According to the FICO® scale, a good credit score falls between 670 and 739. However, having a score in that range or above doesn't guarantee approval on credit applications.
What are 4 reasons why you might be denied credit? ›
Here are the most common reasons why credit card applications are denied and steps you can take to position yourself for future approval:
- Your credit score is too low. ...
- Your income is too low. ...
- You have a negative credit history. ...
- You've applied for too much new credit. ...
- You picked a card that has application restrictions.
Discover credit card limits will always be at least $500, and there's no disclosed maximum. How much you get is determined by your creditworthiness. The only exception is if you have Discover it® Secured Credit Card.
How often does Capital One increase credit limits? ›
You can ask for a credit limit increase whenever you want. It depends on your unique circ*mstances. You may want to request one if your credit score has improved, your income has increased or you've had your card for at least six months.
What is a good credit limit? ›
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.
What happens if you don t get approved for a credit increase? ›
If you're denied, don't despair — a credit limit increase may still be in your future. There'll be a waiting period before you can reapply, but you can use that time to raise your credit scores. If you're eventually approved, remember not to abuse the additional credit.
How much credit limit should I have based on income? ›
What Should My Credit Limit Be Based on Income? While it's broadly true that higher income enables higher credit limits, there is no formula for determining credit limit based on income alone.
Is it better to increase credit limit or get a new card? ›
Raising the credit limit on your existing credit card rather than opening a new one helps prevent you from owing debts to multiple lenders. This may make it easier to repay your debts each month.
Does requesting a credit limit increase hurt score discover? ›
You applied for a new line of credit: When you apply for a new line of credit or request a higher credit limit, they can both result in a hard inquiry. Multiple hard inquiries could negatively impact your credit score and potentially show financial hardship.
Will I get a hard pull on my credit report by requesting a credit limit increase from Amex? ›
Request for a credit limit increase
You could make the request online or over the phone by calling the customer service number on the back of your card. Keep in mind that a request could result in a hard credit inquiry, which might slightly impact your overall credit score.
Does asking for a credit increase hurt score at Bank of America? ›
Bank of America's automatic credit limit increases involve soft credit pulls and have no bearing on your credit score. However, if you request a higher limit, Bank of America might carry out a hard pull. If it rejects your request, you may ask again after taking steps to rectify the issue/s that resulted in the denial.
