Need Some Flexibility? 6 Ways to Increase Your Credit Limit
A good credit score plays a key role in your financial well-being. The better it is, the easier it is for you to qualify for a mortgage or car and student loans. An easy way to increase your credit rating is to get a higher spending limit on your credit card. Fox Business writes that by lowering your credit utilization ratio, which is the percentage of your available credit that you are using, you can boost your credit score substantially.
Why? Credit utilization accounts for 30 percent of your FICO score. Keep in mind, the lower your total credit utilization, the higher your possible FICO score. But before you embark on requesting a higher spending limit, make sure you’re doing it for the right, responsible reason. Ready to boost your credit rating? These six suggestions will help you get your credit card limit increased.
1. Don’t ask too soon or for too much
“Most credit card companies will automatically review your credit after about six months or so of card membership,” Ken Lin, CEO of CreditKarma.com, tells Time. “However, if this doesn’t occur, you can call up your issuer to request an increase.” Don’t request a limit increase within six months of getting a new card, however. It could be an instant red flag that could lead to denial.
Try to be conservative when you’re requesting an increase, Time suggests. Your issuer will typically base its decision on your credit and what kind of a line increase you ask for. You shouldn’t ask or expect for an issuer to double your credit line. Stick with between 10 to 25 percent. If you do ask for too much and get declined, you’ll most likely have to wait at least two to three months before asking again.
2. Wait for automatic increases
This is the easiest way to increase your limit, mainly because it doesn’t require you to do anything. Credit card issuers periodically review customer accounts to determine whether customers should get a credit limit increase. If you’re deemed eligible, you’ll automatically get your credit limit hiked, according to U.S. News & World Report.
The best way to get an automatic increase is to ensure your account has relatively low limits. The higher your limit, the less likely it is that your issuer will hike it for you.