A credit limit increase has the potential to positively impact your credit score, but it is not something you should request every day. It is important to understand when to ask for a credit limit increase, and when not to.
When to Ask for a Credit Limit Increase
- If you find yourself using more than 25% of your credit limit, you should consider requesting a credit limit increase. Increasing your credit limit will improve your utilization ratio, which can improve your credit score over time. However, do not use this as an opportunity to spend more than you can afford. Just because you have a higher credit limit, doesn’t mean you should use it.
- If you recently received a raise, you can ask for a credit limit increase. An increase in income shows that you can handle a higher credit card bill.
- Having a good credit history and score signals to lenders that you are responsible and have the ability to manage your debt. If you are interested in requesting a credit limit increase, make sure you have built up your credit first so you do not get declined.
- If you are interested in transferring a balance from one credit card to another credit card with a lower rate, a credit limit increase may be necessary if you do not have capacity within your current limit. A lower rate has the potential to save you a significant amount of money in the long run.
When Not to Ask for a Credit Limit Increase
- If you recently opened new lines of credit, you should wait to ask for a credit limit increase. Your credit score may drop slightly when you open new loans, and a sudden increase in debt can make it look like you are living beyond your means.
- If your income decreases, you should not ask for a credit limit increase. Doing so would make it look like you do not have enough income to pay your current expenses and could result in a credit limit decrease or card closure.
- Having poor credit reduces your chances of getting approved for a credit limit increase. If you do not have a good credit history and you ask for a credit limit increase, you may be seen as risky and could signal an inability to handle the debt you already have.
- If you recently requested a credit limit increase, you should give it some time before you ask for another. This is because your financial institution might perform a hard pull on your credit, which may drop your credit score slightly.
Requesting a Credit Limit Increase for your Illinois VISA