Many people are unaware of the many benefits they can get from one simple task: increasing their credit limit. A higher credit limit equals more spending power, which may or may not be a good thing. It also means that the increase in available credit lowers what you currently use in comparison. This decreases your credit utilization rate, which, in turn, boosts your credit score.
How To Do It
The benefits sound great, but exactly how do you pull it off? Follow the tips below as a wrong move can cost you.
1. Use Your Account Responsibly
Some people receive credit limit increases automatically. This is up to the discretion of the lender and usually depends on the responsible use of the account. If you keep your credit utilization low, use the card frequently and rarely carry a large balance, this signals to the lender that you can handle a higher limit.
2. Use the Bank’s Website
If that doesn’t work, you’ll have to take some initiative. NerdWallet recommends making a request online. This typically gives you the ability to update your income information and any other factors that may affect your credit-worthiness. Submitting a request online is probably the easiest method.
3. Call Your Bank
If you would rather not deal with your bank’s website, then try calling them. A representative may be able to help you get that credit limit increased. Even if this attempt is unsuccessful, they may provide you with the information you need to be successful in round two. Maybe you need a higher income or need to pay down other accounts with the lender.
4. Apply for New Credit
If your credit score has improved recently, you may have received a few new credit card offers. Check them out to see what the limits look like. If there are specific banks or cards you have in mind, give them a call. You might be able to get a new card with a much higher limit than you currently have. However, this will definitely lead to a hard credit check.
When To Request an Increase
The worst time to request a credit increase is when you’re in over your head in debt. Even if you have a great payment history with the bank you ask, the bank may deny your request. What’s worse is that they likely did a hard credit pull before doing so, causing further damage to your score. Here are the best times to ask for an increase.
1. Better Job
If you recently got a new job and you now make significantly more money, it’s a great time to ask for a raise. Updating your income information may result in an increased credit limit without the need for a hard pull of your credit. Confirm with your bank before making a request.
2. No New Inquiries
If you ask for a credit limit increase after applying for credit elsewhere, the bank will see this when they pull your credit report. This may cause them to believe that you are desperate for funds. Desperation often correlates with default, so you may get denied. Wait at least six months to a year from your last inquiry.
3. Great History
Not everyone who’s trying to build their credit score or increase their limit has a bad credit history. In fact, your score may already be in the 700s. If this is true of your situation, you’re in the best position to ask for an increase. If your credit history or that specific account is new, consider waiting for six or so months.
4. Credit Score Increase
If your score recently increased, your odds of getting a corresponding credit limit increase improves significantly. However, consider if this is your top priority. Is there anything else you may need that good credit score for? If you plan to buy a car or make another big credit purchase soon, you may want to hold off. Remember that a hard credit pull may cause your score to dip again.
How Tradelines Can Help
When all else fails, many people turn to tradelines to increase their available credit. They may not be able to actively use these accounts, but the tradelines nonetheless improve credit utilization automatically. For more information about how this works, give Coast Tradelines a call at 619-363-1472.