How To Get An Increase In Credit LimitNovember 17, 2011 - 4:26 pm
When you apply for a credit card, you may get approval for a credit card but not at the spending limit you were counting on. Credit card providers are stricter with their guidelines these days as more consumers are struggling with credit problems and debts they can’t seem to eliminate.
Credit card companies can not afford to take big risks with consumer defaults so if they are willing to offer a preliminary approval of a credit card but not at the credit card limit you needed, don’t give up just yet. There is still some hope.
Understand the Role of a Credit Score
Credit card providers will investigate the application for credit and ensure the applicant meets their eligibility requirements. In addition to have steady employment, card providers look carefully at the credit score and credit histories of the consumer. If the score is low or the history report reflects some money mistakes in the past, the card provider can set the spending limit of the new card based on that past credit information.
While you may not have the worst score in America, you may not have the strongest credit history at this point. The credit card company will grant you access to the card but likely will only allow a few hundred dollars in spending limits. This will limit how much money they lose should you default on the card.
How to Raise Your Credit Limit
In order to get a higher credit limit on your new credit card so you’ll have access to more spending power, consider the following tips for seeking an increase:
Pay On Time
In order to have some kind of bargaining power, you need to do everything you can to prove you are a reliable, responsible customer. One big issue for credit card companies is the payment of balances on time each month. Not only does this information affect your credit score, it also builds the confidence of your credit card company that you can use credit wisely.
Making huge purchases on a credit card without the ability to pay off the balance in full at the end of the billing cycle may signal you are a reckless spender. It is better to make small purchases on a credit card and then pay off the balance in full. Emergency situations may be the only exception to this rule. Overextending your credit limits means you’ll pay high fees and your credit score can drop as a result of not spending on credit cards within reason.
Eliminate Other Debts
In order to improve your overall financial life, it is wise to reduce as much of your debt load as you can afford to do each month. By freeing up your credit card limits and getting rid of monthly expenses, you’ll be able to show the card company you are working to improve your credit and are more responsible for your spending. Eliminating your debts also makes it easier to save for the short and long-term which give you more financial stability.
Contact Them Directly
If, after your efforts to improve your credit standing, your credit card company has not automatically increased your credit spending limits, you do have the option to contact the company directly and request an increase based on your past performance and current credit rating. Not all companies will be willing to honor your request when you initially open an account but after a few months of responsible spending and payments, many will oblige your request.
Credit Increase Caveat
Before you inquire about an increase in your spending limits on your credit card, make sure you are making the request because it makes sense for your financial life and not simply because you want a high number. Increased limits do give you more spending power but can also tempt you into spending more than you can afford to pay back.