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Credit Limit Increase FAQs

Will a credit limit increase hurt my credit score? 

Requesting a credit card credit limit increase may result in a hard pull of your credit report. For this reason, it may hurt your credit score in the short term. More importantly, a credit limit increase may actually help your credit score in the long run. How you may be wondering. Well, a credit limit increase may lower your credit utilization. Your credit utilization is a big factor in determining your credit score. Actually, it represents about 30% of your score. Your credit utilization is simply the total outstanding credit card balances you have divided by your limits on all cards. When it comes to impacting your credit score, the lower the better as far as credit utilization. Hence, a credit limit increase that lowers your credit utilization may improve your score. You should strive for a credit utilization of 30% or lower for a positive impact on your credit score.

When is the right time to request a credit limit increase?

While some credit card issuers will automatically increase your credit limit at various times, you also have the ability to request a credit limit increase when you need it. You should really only request an increase if you have a specific reason such as a large purchase, a large balance transfer, or another goal. Here are some points pertaining to the right time to request a credit limit increase.

  • You have a large purchase to make that is over your credit limit.
  • You have a good credit history, or your credit score has improved significantly since you first got the card.
  • You’ve built a long history as a loyal cardholder.
  • Your income has increased, which you feel warrants a credit limit increase.
  • You want to utilize a higher limit to take advantage of credit card rewards. This is a great perk, especially when you have the funds to pay off the balance each month.
  • Your goal is to lower your credit utilization to help your credit score as we’ve mentioned above. Again, increasing your credit limit will help only if you don’t increase your spending. It’s important to remember that if you get in over your head with an increased credit limit, your goal of improving your credit score may backfire. Late and missed payments will end up hurting your score.
  • Finally, if you just want the ease of using your credit card for all expenses and purchases, you may need an increase in credit limit to meet your monthly needs. Again, this may be a smart idea if you know you will have the funds in your budget to pay your increased credit card bill each month.

How can I request a credit limit increase?

If you feel it’s the right time, you can contact your credit card company to make a formal request for a credit limit increase. Some companies allow you to make the request online. Other credit card companies require you to call and speak to a representative. 

What information will I need when I request a credit limit increase? 

Credit card issuers will typically request proof of income, employment status, and mortgage or rent payment. They will also pull your credit history and may also want to look at your current debt-to-credit ratio. Be prepared to plead your case. For example, you’ve been a loyal credit card customer who pays their bill in full each month, your income has recently increased, etc.

Your takeaway

While an increased credit limit has many benefits, including more buying power, if you don’t handle your debt responsibly it can become a big problem. If requesting a credit limit increase is still something you want to pursue, start paying down your credit card bill now. You’ll be better prepared when you make the request. The credit card company will look at your credit utilization rate, so you will want to bring that balance down beforehand. If you’ve proven you can manage your finances well and are a responsible borrower with a dependable and high enough income, you should have no problem. Keep in mind, not everyone gets approved for a credit limit increase. If you get denied, you can work to pay down your existing balance and improve things such as your credit score and then try again at a later date.

Tap to Learn more about Benchmark Federal Credit Unions credit card options.

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