There are several reasons you might want to ask your credit card issuer to increase your credit limit. One is that you may be planning some travel or major purchases that could cause you to bump up against your current limit. Another is that you might hope to raise your credit score by improving your credit utilization ratio. That's the amount of debt you have outstanding at any given point compared with the amount of credit you have available to you. A higher credit limit can mean a higher score—as long as you don't go out and charge more than you normally would.
But it's entirely up to the lender whether to grant you that increase. Here's what you need to know about how lenders make the decision to approve a credit limit increase or deny one.
Key Takeaways
- When you apply for a credit limit increase, the lender will usually check your credit report at one or more of the major credit bureaus.
- The lender will most likely also ask you about your current income (which isn't on your credit reports).
- If your request is denied, the lender is required by law to tell you why.
- Typically you shouldn't request an increased credit line more often than every six months, unless you've had a significant increase in your income.
Why Credit Limit Increases Are Declined
When you request a credit limit increase from your credit card provider or other lender, it will review your past payment history both with it and any other financial institutions you have credit accounts with. It will do that by pulling your credit reports at one or more of the three major credit bureaus.
Among the things it will look at are your current credit utilization ratio and your history of past payments. If your credit utilization ratio is high, that could mean you have racked up too much debt already, making you a poor candidate for a credit limit increase. If your credit report shows a number of missed or late payments, that's also a red flag to the lender. One of the most detrimental marks on your credit report would be if you have ever defaulted on a credit card or loan.
A common reason that applicants are turned down for a credit limit increase is insufficient income. The card issuer wants to see an income that can reasonably support the amount of credit you have requested. For example, if you only make $20,000 per year, do not expect your credit limit to be increased to $15,000. Your income is not shown on your credit reports, but the lender will likely have requested it when you applied for the increase.
Important
Because your lenders will look at your credit reports in deciding whether to raise your credit limit, you may want to check your credit reports even before you apply. By law, you can obtain free copies from each of the three major bureaus at least once at year at the official website, AnnualCreditReport.com. If you find any errors that are likely to be detrimental to your application, you should ask the bureaus to correct them.
What to Do if Your Request Is Declined
If your request for a credit limit increase is denied, the lender is required by law to tell you why. This is known as an adverse action notice, and it will usually come in the mail. If, for some reason, you receive no explanation, you should ask the lender. Its customer service reps will either discuss this with you over the phone or, more commonly, send you a letter listing the reason for your denial.
What should you do next? One tactic you might consider if you need more access to credit is to submit a new request for a lower amount. Sometimes the credit card issuer will counter your request and offer a credit limit that it considers acceptable. Alternatively, you might seek out a different issuer that can offer you more lenient terms.
In addition, you probably want to address the issues that the lender said resulted in its denial. For example, if your credit score was too low, you can begin to take steps to raise it. Those including making sure you pay all your bills on time and not using too much of the credit you already have available to you.
Why Would You Be Denied a Credit Limit Increase?
You could be denied a credit limit increase for many reasons, such as a history of late payments, too low of a credit score, too little credit history, too many recent applications, or an inadequate verifiable income. If you were already approved for a credit limit increase recently, that could be another reason.
Does Asking for a Credit Limit Increase Affect Your Credit Score?
That can depend on your credit card issuer. If it does what's known as a soft credit check, it will not affect your credit score in any way. If the company makes a hard credit check, that may lower your score a bit, but usually only temporarily.
How Often Can You Request a Credit Limit Increase?
In theory, you can request a higher credit limit whenever you want. Many card issuers make it easy by allowing for increase requests on their website portals. However, issuers generally say it's best to wait about six months between requests, unless you've had a significant increase in salary in the meantime.
The Bottom Line
Requesting a credit limit increase is common practice, especially if you are new to having credit cards and find yourself well below the average credit limit (currently around $30,000, according to the credit bureau Experian). Before you apply, however, it's worth checking your credit reports so you know what information the card issuer will be using to decide on your request.
FAQs
You've transitioned to a lower-paying job: You may not be approved for a credit limit increase if your income has decreased. Your credit isn't good or excellent: If your credit score isn't in the best shape, you may not be approved for a credit limit increase.
Why would I get denied a credit limit increase? ›
You could be denied a credit limit increase for many reasons, such as a history of late payments, too low of a credit score, too little credit history, too many recent applications, or an inadequate verifiable income.
Is there any reason not to increase credit limit? ›
The number one downside of increasing your credit card limit is that you could start to spend more – due to the available credit – and therefore your credit card balance could increase. You owe more! That could mean you get into more debt, if you don't manage it, which could have a negative impact on your credit score.
What are three reasons for credit denial? ›
The reasons they give for rejecting your application must be specific, such as, “Your income is too low,” “You have not been working long enough,” or “You didn't receive enough points on our credit scoring system.” General statements like, “You didn't meet our standards,” are not enough.
Does a credit limit increase request hurt score? ›
If you request a credit limit increase, your credit card issuer may perform a hard inquiry on your credit, which may temporarily lower your credit scores. If an issuer automatically raises a cardholder's credit limit, it may involve a soft inquiry, which doesn't affect credit scores.
What determines a credit limit increase? ›
Your credit card company may decide to automatically increase your credit limit because of changes in your financial situation or improvements in your credit scores. Or you could request an increase yourself. Remember, a lender isn't guaranteed to give you an increase when you ask for one.
Why did I only get a 500 credit limit? ›
If you're issued a credit card with a low credit limit, it could be for a number of reasons, including: Poor credit history. High balances with other credit cards. Low income.
Is 10000 a good credit limit? ›
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.
How often should I ask for a credit limit increase? ›
You should wait six months before you apply again. But you can use this time to help increase your credit score.
When should I ask for a credit limit increase? ›
A better option is to build your credit and ask for an increase when you have a good credit score. When your income has decreased: A recent layoff, demotion or job switch that resulted in a lower income can hurt your chances of receiving a credit limit increase.
It can sting if you don't qualify and the application is declined, but talking to a human through the reconsideration line can help. The reconsideration process includes a manual review of your credit report by an analyst with the bank or card issuer.
Why would Uplift deny me? ›
Just know that each time you apply to use Uplift, we look at a number of factors including your credit information, purchase details, current loan activity, and more. Approval in the past does not guarantee future approvals.
What are your rights if you are denied credit? ›
You have a right to receive information in writing -- and in most cases, that means you get timely information on the decision a lender has made about your application for credit. Be sure before signing. You shouldn't ever feel pressured to sign.
Is it good to accept a credit limit increase? ›
Consider accepting a pre-approved credit limit increase if: You pay off your card every month and have no problem making payments. You need to make a big purchase, and the extra credit will be handy. You may need a higher limit at a later date.
Why hasn't Capital One increase credit limit? ›
What factors contribute to a denial of a credit line increase request? While the reasons behind a denial may vary, common reasons why your request for a credit line increase may be declined include: Your Capital One account is too new. There has recently been a change to the credit line on this account.
Will I get a hard pull on my credit report by requesting a credit limit increase from Amex? ›
Request for a credit limit increase
You could make the request online or over the phone by calling the customer service number on the back of your card. Keep in mind that a request could result in a hard credit inquiry, which might slightly impact your overall credit score.
How often can you ask for a credit limit increase? ›
Before you get started on your request, consider the three qualifications: You generally need to be a cardholder for at least three months. You typically can only request an increase once every six months. Card issuers may review your credit report if you request a specific credit limit.
What credit cards have a $20,000 limit? ›
For those looking for a Credit Cards with $20000 Limit Guaranteed Approval, there are several options available, including the Chase Sapphire Reserve, American Express Gold Card, Ink Business Preferred Credit Card, Capital One Venture X Rewards Credit Card, and the Chase Sapphire Preferred Card.
Is a 4000 credit limit good? ›
A $4,000 credit limit is good if you have fair to good credit, as it is well above the lowest limits on the market but still far below the highest. The average credit card limit overall is around $13,000. You typically need good or excellent credit, a high income and little to no existing debt to get a limit that high.
Is your account too new to request a limit increase? ›
Credit card companies usually will not approve credit limit increases for accounts that have only been open for a few months as they are too new to be considered. Accounts that recently received a credit limit increase or decrease are also similarly denied consideration typically.
