How to Increase Your Discover Credit Limit

Yes, you too could increase your Discover card's buying power. Here's how.

Like other credit card issuers, Discover's credit limits are not set in stone. Cardholders can always make a request to lift their ceiling, and if they've demonstrated enough fiscal prudence and responsibility, Discover will probably grant that wish.

This is because a credit limit increase potentially benefits both cardholder and issuer. After all, assuming all things are equal, having more credit available to its cardholders increases an issuer's opportunities for making money from them (through interest charges, fees, etc.).

Note how we qualify the chances for a dependably prudent cardholder with the word "probably." Even for the worthiest customers, a Discover credit increase isn't guaranteed. There are several important factors in the issuer's decision, and some good practices and tips you should know before you hit the send button on your request. Let's dive right into it.

First things first: What is a credit limit?

Simply put, a credit limit is the maximum amount of money a creditor will let you borrow. In the credit card world, it's how much your issuer allows you to spend on each of its cards.

The issuer sets the credit limit based on a number of factors, including but not limited to:

• Your credit utilization, i.e. how much of your available credit is being used.
• Your history of paying card statements on time. 

Whether you tend to pay down your debt, or only make the minimum payments set by your issuer (typically, these are a small percentage of your outstanding debt).

Decision factors important to Discover

Every credit card issuer weighs the factors in a credit limit increase request differently, although the above-mentioned ones are almost always critical. Discover particularly emphasizes these factors:

• Timeliness. Discover points out that credit card customers that fail often or consistently to pay their statements on time are branded "non-payment threats." Nobody likes a threat; being tagged as one will likely not win a cardholder an increased credit limit.
• Credit utilization ratio. This is how credit utilization is measured. It's the credit used as a percentage of the overall limit. It's critical to your credit score (making up about one-third of it); of course Discover and its peers like to see a relatively low number here.
• Income high, expenses low. It's not only about how a requester manages his or her cards. Discover says that a healthy gap between total income and overall expenses is an important factor in its decisions on credit limit requests.
• History. The longer an applicant's credit history, the more confident an issuer will be in its decision whether to raise credit limits. It almost goes without saying at this point that a requesting cardholder's history should be rife with timely payments.
• Number of recent inquiries. A person applying for a credit limit increase should not have too many credit inquiries in the recent past. This, Discover says, might indicate that the applicant is too much of a credit risk for issuers.

How to apply for a Discover credit increase

It's in the best interests of issuers to make a credit limit request simple and straightforward. This allows them to complete the process relatively quickly, and increase those potential interest fees and other forms of remuneration coming their way.

Discover's two main avenues for making a credit limit request are:

• By phone. Cardholders can call Discover's main number (1-800-DISCOVER, or 1-800-347-2683) in order to make their request orally. Applicants should be prepared with the following information (although the company may inquire about other factors):
       •Current total income
       •Current housing expenses (a key item on the costs side of a credit limit decision)
       •The various types of financial accounts held (checking, IRA, brokerage, etc.)
• Online. This is done through your account portal; log in to access the site's credit limit request page. When making an online application, it's also wise to have the above information either at the ready, or easily accessible.

Dos and don'ts once you get your credit limit increase

If all goes well, Discover will grant your request for a credit limit boost. When that happens you may be tempted to go on a buying spree or several. That's not a good idea; first, it'll play havoc with your credit utilization rate, second it'll add on debt you might have more difficulty retiring.

Discover is well acquainted with cardholders who let their spending get out of control. The company has a set of good suggestions for avoiding debt, among which are:

• Don't shop as a hobby. There's a big difference between want and need. In a time where millions of goods are only a mouse click away, it can be hard to resist temptation. Discover suggests putting effort and energy into other satisfying pastimes.
• Set aside some cash in a savings account for emergencies, and add to it on a regular basis. This will provide a source of funding for critical one-time items. It's much better to pay these out-of-pocket than with an interest-charging credit card.
• Put a ceiling on your housing costs. Americans are willing to pay a lot to live in comfort. Personal finance experts recommend limiting housing costs to around 30% of income. This should leave enough room for other essentials, plus some discretionary spending.

By all means, after a credit limit increase you should spend a little extra on yourself and your nearest and dearest. But not to excess. An acceptable utilization rate likely helped you push that limit higher, don't squander it.

It's also good not to use that I-just-got-a-raise confidence to go crazy applying for other credit limit increases and/or new credit cards. Too many hard inquiries on increase requests and new card applications can ding a credit score. On top of that, they can raise a red flag that you're taking on too much credit at once. Potential issuers don't like to see that; it looks irresponsible.