Once you’ve established good payment history with a credit card company, you may be looking to expand your credit limit beyond the initial offering. Whether your limit is $500 or $50,000, sometimes you need a little more cash to complete home projects or buy holiday gifts.
Because of the recession, lenders have been stingier with credit. But maintaining a solid history should enable you to negotiate reasonable increases in your credit limit. Most banks require at least six months of spotless credit history to consider an increase; others may call for one year of on-time payments.
Do I need more credit?
Sometimes, it is a good idea to ask for a higher credit limit. If you need to make a large purchase like car repair or a home improvement project, the interest rate on your credit card is likely lower than a credit card from the local home improvement store. If you’re seeking a higher credit limit to buy holiday gifts, determine whether you can pay off the balance before the interest payments begin to outweigh the benefits.
How do I prepare to ask for a credit limit increase?
It’s best to have your ducks in a row before asking your credit card company to raise your limit. Check your credit report and make sure there are no erroneous entries that could cause the bank to turn you down. Review your payment history to ensure you’ve been paying on time, and consider paying down your balance. Lenders grant more credit to those with higher credit scores, so make sure your financial house is in order before you go to the bank with your hand out.
How do I ask the bank to increase my credit limit?
Many times, banks and credit card companies offer credit limit increases after a specific period of time to customers with good credit. If your credit is less than perfect, though, you may need to negotiate with the lender for more leeway. Several banks offer online credit limit increase forms, and others have customer service representatives who handle credit limit increases. Be sure to keep your request reasonable. An exorbitant figure could flag your account as suspicious.
In this case, the worst that can happen is for a lender to deny your request. If you are refused a credit limit increase, spend a few more months paying your bills on time and improving your credit score, and ask again. As you build history as a good customer, lenders will be much more generous than they are with new, unproven customers.
