Increasing your available credit can offer some much-needed breathing room for consumers with a big upcoming purchase or who regularly find themselves bumping up against their credit limit. Having a bigger line of credit can also provide a boost to your credit score (assuming it doesn't cause you to spend more), as your credit utilization ratio goes down. Credit utilization is the ratio of your debt owed to your credit available, and more available credit in the denominator will cause that ratio to decrease.
Getting yourself a bigger line of credit may be as simple as picking up the phone and asking for one. If you've demonstrated responsible financial behavior with your current credit card company for six months or more -- on-time payments, paying your bill in full every month, staying within your credit limit -- give them a call and ask for an increase. According to a survey from CreditCards.com, 89% of people received an increase just by asking (politely).
But there are a few things you can do to improve your chances of getting a bigger line of credit.
Keep your employment and income information up to date
One of the biggest factors determining the amount of credit lenders are willing to extend you is your employment and income data. Make sure you include all of your income in your profile.
Income sources include:
- Salary or wages
- Self-employment income
- Interest and dividends
- Retirement benefits (like social security or a pension) and public assistance
- Money from somebody else that is regularly deposited into an account you own or share with somebody else
- Alimony or child support
Including all of these sources in your income profile, not just the number on your W-2, will help credit issuers offer you more credit. That CreditCards.com survey found people with annual incomes over $75,000 had an easier time getting a credit limit increase than those under that threshold. Some issuers even have hard limits on what percentage of your income they'll extend to you, so this step is absolutely necessary to increase your line of credit.
Exhibit good credit behavior
The next big factor is to show the credit card issuer that you're a responsible credit card holder.
- Pay your bill on time every month.
- Pay your bill in full.
- Keep your credit utilization low.
The last point may seem impossible (considering you're in need of a bigger line of credit), but there are some simple strategies for staying well below your current credit limit. For example, whenever your credit card balance climbs over 30% of your credit limit, pay off all or part of your bill midcycle.
An alternative to asking for a credit limit increase
Requesting an increase in credit for an existing credit card usually results in the issuer pulling your credit report. That has a small temporary impact on your credit score (which should be offset by the increase in available credit and lower credit utilization).
But if you're going to take the credit pull, you might as well apply for another credit card. There are several benefits to this strategy. First, credit card issuers usually give you the credit limit they think you deserve. You don't have to ask for a specific increase and risk over- or underestimating the credit limit you think you deserve.
Second, signing up for a new credit card creates an opportunity to earn a lucrative sign-up bonus. And if you're asking for a credit limit increase because of a big upcoming purchase, meeting the minimum spend requirements should be easy. This presents a nice way to get some additional cash back or travel rewards.
If you'd like to get the bigger line of credit on your current credit card, apply for a new credit card with the same bank. After you earn your sign-up bonus, call up the issuer and ask to move credit from one account to the other. The credit card company won't have to pull your credit report just to move available credit around. It might, however, require you to keep a minimum amount of credit on one card.
What if you get denied for a bigger line of credit?
If you don't get increase in credit you request, the issuer should provide a reason why. It could be something simple like not enough credit history, or it could bring up serious problems on your credit report. Sometimes waiting and exhibiting good behavior is the only thing that can improve your chances of getting a bigger line of credit. Other times you'll need to be proactive and build your credit score.
You can get a free copy of your credit report from annualcreditreport.com. You might be able to find out which credit bureau the credit card issuer pulled your report from, and specifically look up that bureau's report from the free website. (You're allowed one free report per year from each bureau.) If you spot any inaccuracies, you can file a dispute with the bureau. Once it's resolved, reapply for a credit limit increase.
If the issuer still won't approve you, it's time to plead your case. Tell them you've been a loyal customer for a long time, you pay your bill on time and in full every month, etc. If you've recently gotten a raise, point that out. You might need to negotiate less of an increase.
If you're still not seeing success, take your business elsewhere. Apply for a new credit card with a different credit card company. If you're hoping to make a big purchase that exceeds your current credit limit, you may need to split payment across multiple cards. That's usually not a problem for most merchants. It's not the most convenient solution, but it's a good last resort.