When to Request a Credit Limit Increase

Credit Limit Increase

Most of us tend to make one of two mistakes when it comes to credit cards: either we overuse them, or we underuse them. However, neither of these do anything to help your credit score. It’s okay to use your credit cards regularly, as long as you keep up with the balances. If you manage your credit cards correctly, they can really help your credit score shine. Having a high limit of available credit combined with low balances makes you look like a credit star.

But what if you need to put more on your credit card than the limit allows? Well, that’s when you would request an increase on your credit limit. Most credit card companies will do that for you, provided you can prove (based on your income and current credit score) that you have the ability to pay it back. Occasionally, a credit card company will increase your limit without even asking for it. Here are a few reasons to increase your credit limit.

  1. You want to boost your credit.

    As previously mentioned, maintaining a low balance on your card when you have a high amount of available credit looks very good on your credit report. Even if you only have one card with a lower limit ($1000 or under), you can still make a positive impact on your credit score by paying the balance off every month. Requesting a limit increase can only work to raise your score faster, as long as you maintain the same spending habits.

  2. You want to do a balance transfer.

    If you have a credit card with a low interest rate, and want to transfer the balance from another card with a higher interest rate, you can call your credit card company and just let them know your plan. They will likely work with you to make it happen, as long as your credit score is in a good position.

  3. You have an emergency.

    One of the best things about credit cards is that they are great for emergencies. All of us have had unexpected things come up, whether it’s medical bills, expensive car repairs, or even the sudden death of a loved one. In these cases, it’s nice to have a safety net to fall back on and help us avoid completely emptying our bank accounts. Of course, in this scenario, you want to really be careful and make your payments on time. If you don’t, your credit card company can and will bump up your interest rate into the double digits, and that can accumulate fast.

And here are two reasons not to request a credit increase:

  1. You’ve been spending too much and have maxed out your credit card.

    Consistently spending outside of your means will always manifest itself on your credit report, and could lead to financial difficulties in the future. Pay off any debt you currently owe before asking for a credit limit increase from your credit card company.

  2. A credit limit increase will likely require a hard inquiry on your history.

    To determine if they can approve a credit limit increase, the credit card company might need to process an inquiry, which could cost a few points on your credit score. If you’ve accumulated several inquiries over a short period of time, it could be problematic. In this case, you just need to weigh the pros and cons and decide if requesting the credit limit increase is worth the potential consequence.

Ultimately, only you can decide if a credit limit increase is a wise choice for you financially. If you do, just make sure you’re prepared to pay it all off. Fixing credit can be a long process. To learn more about how to keep your credit in tip-top shape, visit www.creditrepair.com.

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