Yes, it's possible to get a credit limit increase without asking, typically after 6-12 consecutive months of on-time bill payments with a new credit card account. Credit card companies need evidence that you can handle your current spending limit responsibly before giving you the ability to borrow more.
If you've been making all your monthly credit card payments on time, you might be given an automatic credit limit increase by your provider. Here's what you need to know about unsolicited credit card increases and how they work.
A higher credit limit gives your greater flexibility to fund expensive purchases, including emergency expenses. Lowers your credit utilization ratio. Your credit utilization ratio, generally expressed as a percentage, is the amount of revolving credit you're using divided by the total revolving credit available to you.
The typical increase amount ranges from 10% to 25% of your current limit. Anything greater may trigger a hard inquiry on your credit. If your issuer denies the request, you may be able to make a counteroffer. Depending on the bank, you may not even have the opportunity to request a specific amount.
Tips for requesting a credit limit increase
Typically, you'll need to provide your total annual income, current employment status and monthly mortgage or rent payment. You may need to also provide the amount of the credit limit increase you're requesting. Be prepared to defend your request for a higher limit.
In the long term, a credit limit increase may improve your credit scores, provided you make regular, on-time payments. In the short term, however, asking for a credit limit increase may temporarily decrease your scores.
A higher income generally leads to a higher credit limit, but there isn't a specific credit limit you'll receive based on your income. A credit card's credit limit can depend on many factors, including: Your income, employment status and DTI ratio. Your credit history and credit score.
Before you get started on your request, consider the three qualifications: You generally need to be a cardholder for at least three months. You typically can only request an increase once every six months. Card issuers may review your credit report if you request a specific credit limit.
To potentially improve your odds of a credit limit increase, keep your account in good standing, pay your bills on time, and maintain a lower utilization rate.
For a score with a range of 300 to 850, a credit score of 670 to 739 is considered good. Credit scores of 740 and above are very good while 800 and higher are excellent.
If you work to improve your credit for at least six months, it's possible you could qualify for an automatic credit limit increase or get one if you ask again.
If you missed a payment because of extenuating circumstances and you've brought account current, you could try to contact the creditor or send a goodwill letter and ask them to remove the late payment.
The time it takes to raise your credit score from 500 to 700 can vary widely depending on your individual financial situation. On average, it may take anywhere from 12 to 24 months of responsible credit management, including timely payments and reducing debt, to see a significant improvement in your credit score.
The second way you may get a credit limit increase is if a credit card company increases your limit without a request from you. This typically occurs after you've demonstrated responsible credit habits such as making on-time payments and paying more than the minimum payment required.
You may automatically qualify for a credit line increase. This usually happens if you've been paying on time, keeping your credit utilization low, and have a good credit history. Your credit card company may send you an alert to let you know that you've received a new credit line.
There's no such thing as “too many” hard credit inquiries, but multiple applications for new credit accounts within a short time frame may point to a risky borrower. Rate shopping for a particular loan, however, may be treated as a single inquiry and have minimal impact on your creditworthiness.
How does Capital One's credit line increase program work? For certain cards, Capital One indicates that it will automatically review your account for credit line increases after as few as six months.
If the credit increase is not automatic and you actively request it, expect your lender to conduct a hard credit inquiry. While this could temporarily lower your score by a few points, likely no more than 10, the effect is generally short-lived.