One of the best ways to help boost your credit score is by increasing your available credit limit. And while this may sound counterintuitive, it’s actually a good thing. Lenders will be more confident in giving you additional financing down the line if you have a large amount of available credit. So how can you increase your credit limit? Here are four options.
Ask your credit card issuer for an increase
If you have a good relationship with the company, they may be more than happy to bump up your limit. The key here is to be polite and keep it realistic. You don’t want them to think you’re going off the rails and applying for new cards all over town. As per the experts at SoFi, “A credit card issuer typically bases the credit limit on factors such as the applicant’s credit score, income, credit history, debt-to-income ratio, and others.”
Don’t just pick up the phone or shoot off an email without doing some research first! You’ll have a much higher chance of success if you bring some data with you when making this request, such as copies of recent statements showing that there’s plenty left on those cards and perhaps even a few months’ worth of payments made at or near time period end so the company has proof that their customer is reliable (and responsible) when it comes time for paying bills each month).
Look for another credit card
You can also try and get the highest limit credit card or one that has a lower interest rate. There are several other factors to consider when selecting the right credit card for your needs. You may be tempted to go after the latest offer, but it’s important to consider all your options before making a decision.
Request a credit limit increase from another card issuer
You can request an increase on your second card if you have more than one credit card. If the issuer approves it, you’ll be able to use the new line of credit without paying any fees. The catch? You need to be responsible for how much you charge. If you don’t use your card after requesting a limit increase, it will probably revert back to its original limit.
Don’t max out your current credit cards
Your current credit limit and the amount of debt you have on your cards are directly related to your credit score, so try not to max out or overuse any of them. It’s also important that you don’t close old accounts if possible; these can help build a long-term positive history, which will help increase your score.
A good way to check for this is by looking at the balance on each card compared with its limit. The lower these numbers fall, the better (although paying off an account entirely should not impact its longevity). If one or more cards have very high balances relative to their limits, it may be time for belt-tightening before making additional requests for higher limits.
To increase your credit limit, you must be strategic about when and how you make requests. You should also avoid requesting an increase on your current cards if possible because they may not approve it, or they may change the terms of the card if they do.
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