What Are the Reasons to Increase a Credit Limit and How Do You Do It?
Credit cards help you purchase items when you don't have the finances to buy them otherwise. To utilize the cards more efficiently, you might want to consider increasing the limit. Are there good reasons to or will it cause more problems in the future?
While it may seem like a bad idea, it might actually be beneficial, especially if you use DoNotPay to request it. DoNotPay can also help you in increasing your credit limit with an Apple card, Wells Fargo card, Capital One card, Discover Card Chase card
How Exactly Do Credit Limits Work?
When you open a credit card with a company, you will receive a on the card. The lender chooses how much you can spend on it by limiting you to that amount. When you reach your credit limit, you could be charged a fee each month that you're over, and your card will be declined if you try to use it when you have no available credit left.
In the beginning, when you use your card, the amount you spend will be subtracted from your available credit. For example, if you have a $5,000 credit limit, and you spend $1,000, you will then have a $4,000 credit limit available. However, when you make your payment each month, the amount you pay gets added back on. So, if you made the whole $1,000 payment to avoid interest fees, your to $5,000. The lender takes in a few different factors when they decide how much credit your account will have. They take the following into consideration:
- Payment history- Do you pay your bills on time?
- How many other loans or credit cards do you have?
- How much money do you owe in total?
Based on that information, they then come up with the amount they're willing to let you have in credit.
What Does Increasing the Credit Limit Mean and When Can You Ask For It?
For those who have a good standing with the company they have a credit card with, you can periodically ask to have your . Each company that offers credit cards have their own stipulations of things they want to see with the consumer and their spending habits. But for the most part, they want to see above-average accounts, where you consistently pay off your monthly balance or come very close to paying the balance off. If you've been late a time or two, that could affect your ability to have your limit increased. There are a few different times that you could ask for an increase. Some of those include:
- When you have a good credit score.
- When you have a wage increase.
- When you have consistently paid your monthly balances for about six months.
What Are the Reasons to Increase a Credit Limit?
Many people shy away from asking for a because they see it as an opportunity to go further into debt. While that may be true in some cases, there are still a few would be a good thing. Some reasons to consider are:
Raise Your Credit Score
To keep your credit score in good standing, you will need approximately a 30% and an underutilization score. If you exceed that 30%, your score will start to go down. Utilization is a percentage based on the amount of your credit limit minus the amount of your spending balance. For example, let's say you have a $5,000 credit limit, and you have spent $2,000 on the card. This gives you a utilization score of approximately 40%. That's too high, so your score would go down.
Have Extra Padding Just in Case
Another increase is to have extra money waiting in the wings in case of an emergency. You might be satisfied with the $5,000 credit limit, but what happens if the engine in your car breaks down and you need $5,500 or more to fix it? Asking for a credit limit increase will give you that extra padding in case something unforeseen shows up out of nowhere.
How to Ask For a Credit Limit Increase?
In some cases, depending on the credit card issuer, you might get automatic increases without you needing to ask. But, usually, you have to inquire about getting your account reviewed for one. Here are the options you can choose to increase your credit limit:
|First, you can go to your account online and see if there's an option for you to request a credit limit increase. It may ask you to review your current financial information and update anything that may have changed.
|Make a call
|The other way to request a credit limit increase is by calling your card issuer and talking to a customer service agent. They will typically ask you some questions to see if any of your information has changed. If anything has, as an increase in your wages, be sure to let them know. Stay calm and don't get angry with the representative if it doesn't sound like things are going your way. Be courteous if your request is rejected, and calmly ask what the reasons are for the decline
In some cases, you may have to wait for a manager or someone higher up to decide whether you're eligible for an increase. Inquiring about an increase in your credit limit can be confusing for some credit cards. Some make it easy on their website, while others seem impossible to find. Also, it can be time-consuming sitting on the phone waiting for an agent to talk to. But, there's an easier way.
How DoNotPay Can Help You Request a Credit Limit Increase
Don't stress trying to figure out how to ask for an increase in your credit limit. Let DoNotpay handle the process for you. All you need to do is:
- Go to the Credit Limit Increase product on DoNotPay.
- Select which type of card you own and your credit provider.
- Tell us more about your card, such as when you first created this card, your current credit limit, what you would like your new limit to be, your card number, and whether you've missed past payments.
- Tell us more about your current income and expenses and why you would like to request a limit increase.
- Indicate whether you want to allow hard inquiries to be made into your credit history. Upload a copy of your ID and provide your e-signature
- Submit your task! DoNotPay will deliver the request letter on your behalf. You should hear back from the card provider with confirmation or a request for more information within a few weeks.
All you have to do after that is wait to hear back from your card issuer to let you know whether they accepted your limit increase request or not.
What Else Can DoNotPay Do?
DoNotPay can help you request an increase with all the popular credit cards. Some of them include:
This is only a sampling of the cards we can help you with. Sign up with DoNotPay today and let us request a credit limit on your behalf.