Why High Limits Are Important
Increasing your available credit is about more than just the vanity of having a high credit limit. There are some real advantages both security wise and financially. Here are some reasons that you might consider looking for an increase.
Lower Credit Utilization
Credit utilization is simply the amount of credit that you are using. If you have 1,000 dollars in available credit and are using 300 dollars, then your credit utilization is at 30 percent.
Credit utilization is the second biggest part of your credit score. Ranking just under on time bill payments, it makes up 30 percent of your score. To have good credit utilization, you should be using less than 30 percent of your credit. If you want excellent utilization, you need to get this number under 10 percent.
There are two ways to lower your credit utilization. You can pay down your debt, which takes time or you can increase your available credit. Using the same example above, if you have 1000 dollars in credit and are using 300 dollars, you are at 30 percent utilization. Increase your available credit to 2000 dollars and your utilization drops to 15 percent.That can result in a nice boost to your score without the had work of debt reduction.
Money For Emergencies
With a high credit card limit, you have a tool that is much handier in an emergency. It can let you get out of a financial jam quicker than just about every other method.
Granted, you should have an emergency savings and you do not want to have to max out a credit card, but it gives you options. Having a high limit can allow you to handle a money emergency quickly and give you 30 days to find other funding to pay off the card before the interest hits.
More Cash Back
Wouldn’t it be nice to really take advantage of those cash back offers? With a higher credit limit, you can put larger purchases on credit cards and get more money back in your pocket. Just be sure to pay the card off when you get the statement.
Getting Your Credit Limit Increase
Now that you can see the benefits, let’s look at how to secure your credit limit increase. There are a lot of ways to go about it.
The simplest and quickest way to get an increase is to simply ask for one. Just pick up the phone and call the number on the back and ask to speak to a customer service representative.Then, simply ask them to increase your limit. You may be asked for a reason for the increase, so be prepared.
In many cases, the direct approach will work, but some card issuers will not comply. Many have strict procedures for increasing limit and many more have cracked down on new credit due to the downturn in the economy. Still, it is worth a shot, so give them a call.
If you are very lucky, your credit card issuer might have an online form to request a credit line increase. This used to be fairly common but is much harder to find these days.
To find an online credit increase form, log in to your account. The credit increase request link will typically be found under a “customer service” or “account services” tab. Find it, submit it and wait. If your lucky, you will get your increase.
Use Your Card
Frequent, responsible usage of your credit card can often trigger a credit limit increase. Credit card companies love users who actively use their cards, so simply use your card and pay off your balance every month. This shows that you are a good customer and a good credit risk.
Simply using your card responsibly is a great way to get an increase quickly especially on a new line of credit.
Why You Might Receive An Increase
There are a number of reasons that you might qualify for a credit limit increase. All of them are related to lowering the risk to a lender. Here are some examples.
Responsible Use Of Credit
A lengthy track history with your lender can go a long way towards getting you an increase. Simply show them that you can use your credit smartly over time and they will eventually raise that limit.
Improvement In Credit Score
If your score has gone up, this is a very good time to ask for an increase in your credit rating. Do note that this will likely result in a hard inquiry to your credit profile. That could cost you a couple points on your credit score, so if you will be using your credit soon for a large purchase, you should probably hold off.
Increase In Your Income
When your credit card issuer determined your original card limit, income was likely a huge factor. This means that if your income has gone up, you are likely due for a credit limit increase.
Most credit card issuers will frequently ask you to update your income, so if your now get 10,000 dollars more a year at work, make sure they know it. Do this by updating your credit card profile or by responding when they ask you for an update.