The credit limit is a vital part of a credit card because it determines the amount a user can borrow. If you have at least one or two credit cards, you may wish for a higher credit limit so you can have the flexibility to make large purchases. However, a bigger limit means more than just increased buying power. It means that you have proven yourself as a good paying customer and responsible card holder for at least 6 months. If you get an increase in your credit limit, an improved credit score is also one of the things that is to be expected. So, how do you give your credit limit a boost? Here are some helpful tips to follow!
Show your credit card company that you are a responsible user
Many credit card companies provide an automatic credit limit increase even without a request from their customers. So how does that happen? All you have to do is to show them you are a responsible card user. Be sure to make on time monthly payments to build a positive payment history. You can also warrant a higher credit limit if you use the card frequently for payments and purchases because it generates swipe fees for the bank.
Request for a credit limit increase
If you can’t wait for your credit card company to give you a higher limit, you can opt to submit a request for a credit limit increase. However, it’s important to take note that taking this step will result in a hard inquiry on your credit reports. It’s because this process is similar to a credit card application which requires the issuer to check your credit standing prior to approving a larger line of credit.
Submitting a credit limit increase request also entails the submission of the information required by the issuer. This may include your monthly housing payment, annual income and other information that will help them evaluate your risk as a credit card user.
Tell your credit card company why you deserve an increase
When requesting for a limit increase, remember that it’s okay to plead your case, but be sure never to sound desperate. Instead of telling your company why and how much you need the increase, make them see why you deserve it. Some of the things you can highlight include the length of time you have been a loyal customer, good payment history, how you utilize 30 percent of your current limit, and your ability to pay your monthly dues on time.
Request for a realistic amount
Asking for an unrealistic or an extremely high credit limit isn’t the way to go if you want to enjoy a higher limit. In fact, it might even get your request denied. Once a request for an increase is denied, you will have to wait a couple of months before being able to reapply. Also, you should already have a ballpark figure of the amount you will request. It’s not something you can ask from the representative because they are prohibited from providing this advice. The good news is that if you have a good credit history, you have a better chance of receiving a substantially higher amount.
Highlight your intent to do a balance transfer
Credit card issuers love balance transfers because each transaction comes with a fee. Check how much the fee costs and weigh if it’s worth it. Then, tell your credit card company that the reason you are requesting for an increase is that you want to transfer your balance. They are more than happy to make it work for you, of course, after careful evaluation of your credit standing, payment history, etc.
A higher credit limit can benefit you in more ways than one. However, it’s imperative to make sure it doesn’t result in a change on your spending habits because again, your credit card isn’t an extension of your wallet. Always make payments on time and use your credit card for emergencies and important purchases only.
If you don’t have a credit card yet and wish to start opening your own credit line, please feel free to reach out to Calcite Credit Union.