Why Does My Credit Card Issuer Keep Increasing My Credit Limit? - NerdWallet (2024)

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Why Does My Credit Card Issuer Keep Increasing My Credit Limit? - NerdWallet? ›

As a reward, the credit card issuer may automatically grant you a higher credit limit, or invite you to request one. It could be just a small bump, or it may be as much as 30%. The news may come to you out of nowhere, but it's no reason to be concerned. In fact, it's a sign you're managing your credit card well.

Credit limit increases happen for a number of reasons. You may outgrow your available credit and need to request more. If you've used your card responsibly over time, your credit card issuer might notify you that you've earned a credit limit increase.

​​​Credit card companies might increase your limit if they consider you a 'good risk'. They'll look at whether: You use your card regularly. You use your card responsibly – for example, you've been meeting your monthly repayments in full or at least paying more than the minimum.

The second way you may get a credit limit increase is if a credit card company increases your limit without a request from you. This typically occurs after you've demonstrated responsible credit habits such as making on-time payments and paying more than the minimum payment required.

It is possible to decline automatic credit limit increases from certain card issuers, but there's little downside to getting one — after all, you don't have to spend up to the credit limit if you don't want to.

Automatic credit limit increases may happen annually or if your card issuer notices you recently updated your income. If you want to ask for a credit limit increase, it can typically be done in one of two ways: online or over the phone.

Sometimes you don't have to ask for an increase, as once you have had your card for six or 12 months you might find that your credit limit increases automatically. Credit card issuers will track your account usage and creditworthiness and may increase your credit card limit without you asking.

Increasing your credit limit could lower your credit utilization ratio. If your spending habits stay the same, you could boost your credit score if you continue to make your monthly payments on time. But if you drastically increase your spending with your increased credit limit, you could hurt your credit score.

If cardholders do not control their spending and increase their expenses along with the limit, then their debts will increase. Some cardholders end up spending more than they can afford at times when they have an increased limit, which results in them paying more interest on their credit card bills.

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.

What to say when asked why you want a credit limit increase? ›

You should explain why you think you deserve a higher credit limit, says Lohrenz. If your credit score has increased since you opened the card, point that out. “You should also mention if you've had an increase in your financial means since you opened the account,” she says.

It's wise to wait at least three months after you open a credit card before you request a credit limit increase. Also, you should put at least six months between credit limit increase requests.

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.

An increase in the credit limit can be taken by the banks as a proof that they can trust you when they lend you money. A higher limit on your credit card will also lead to a high credit score and a good credit score will allow you people easily get loans at low interest rates.

Not necessarily. In fact, increasing the limit can have a number of upsides if you manage your credit wisely. For example, it can help you repair your credit, make large purchases efficiently, or use credit to handle a sudden emergency.