6 things to know before requesting a credit-line increase


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By Dana Dratch  |  Updated: May 17, 2018

Credit card
limits are like clothes: If you’re not careful, they can quickly become too

If you’ve
outgrown your credit line, before you pick up the phone to ask for an increase,
there are a few things you need to understand first. Your request could trigger
a chain of events that could help or hurt your credit – or, interestingly, do both.
You also don’t want to take on more credit than you need or can handle. So it
pays to be strategic.

If you’re seeking a credit-line increase, here are six things you need to know first:

1. Ask, and
you’re likely to receive.

If you want a higher credit limit, odds are all you
need to do is request one. An April 2018 poll conducted by CreditCards.com
found that 85 percent of cardholders who asked for a higher credit limit received one.

However, there’s still a chance your request will be denied. Issuers take
several things into consideration before increasing a credit limit.

example, the more income you bring in, the better your odds of getting an
increased limit. The CreditCards.com poll found those who earn more than
$80,000 a year had more success securing a higher limit than those in lower
income tiers.

Issuers will also consider your account spending, payment history and
debt with other lenders when deciding whether to increase your available credit.

2. Why you
‘need’ a credit-line increase.

While your odds
of receiving a larger line of credit are good, consider why you want (or need)
more available credit.

Do you need a
higher limit to allow for larger items and expenses that you will pay off in
full (like business travel or new appliances for the home)? Or because you’re
reaching for one card consistently, rather than a handful of other cards that
you previously used?

“If you’re good
with your credit, it can be a good thing,” says Kevin Weeks, former president
of the Financial Counseling Association of America.

Or are you
spending more than you make and find the old limit just doesn’t cut it anymore?

“I always
advocate paying balances in full,” he cautions. “Where people can get into
trouble is when they continue to spend over budget and tap that little amount
on the credit card month after month. Next thing you know, you have a
significant amount of credit card debt.”

“Ask yourself
why you’re doing it, and be truthful with that answer,” says Weeks. And if you
“need” that money, he says, “you have bigger issues than the line on your
credit card.”

3. Your credit

“Before you
pick up the phone, you need to check your own credit,” says Bruce McClary,
spokesman for the National Foundation for Credit Counseling. Even though you’re
an existing customer, it’s “like asking for a new loan.”

So check your
credit report (it’s free at AnnualCreditReport.com and at CreditCards.com) to see if there are any issues that would hurt your
chances. If you find errors on your report, take a couple of months to clean
them up, then apply, McClary says.

Also review
your credit use, says Ruth Susswein, deputy director of national priorities for
Consumer Action. For each card, examine your credit line, and how much of it
you use every month (even if you pay it off). That’s what’s known as your credit utilization ratio. The less of it you use, the
better it is for your credit score.

Now add up all
your card credit lines and compare that to the total usage from all your cards,
because credit scoring formulas look at that, too.

Look at your
payment history as if you were the card issuer. Had any late payments in the
past six months to a year? If so, “Don’t ask for a credit-line increase,” says
Susswein. Made only minimum payments in the past six months, especially
recently? Ditto.

“You’re going to look too risky,” she says.“You’re going to
look like you’re having trouble paying off the debt you already owe.”

4. The issuer
will probably pull your credit.

Asking for a
boost in your credit limit might trigger a hard pull on your credit report, says
Danielle Fagre Arlowe, senior vice president for the American Financial
Services Association, a trade group for the credit card industry.

Whenever you
ask for a loan or credit, the lender may “pull” a copy of your credit report.
Those pulls are noted on your credit report for two years and are factored into
your credit score for a year, according to FICO, the company that produces the
most widely used score.

“Ask your credit card issuer, ‘Is this going to trigger a hard pull on my credit report?'”

On average,
they can knock a few points off your credit score, according to the company.

“Ask your
credit card issuer, ‘Is this going to trigger a hard pull on my credit report?’
And they should know,” says Arlowe. “If they don’t, keep asking.”

You don’t
want to risk shaving even a few points from your credit score if you’re soon
going to be financing a big purchase, she says. “It’s a balancing act.”

5. A credit
limit increase may affect your credit.

A credit line increase “can, many times, help your credit score,” says Weeks.
If you increase your credit line and keep your usage the same, you
automatically shrink the utilization ratio. That should benefit your score – if
you don’t convert that new credit into debt, he adds.

Your card issuer also will look at how much credit you already have available, and how long it would take
you to pay the tab if you maxed out all of it at once, says McClary.

Based on your
income and assets, there’s only a finite amount of credit that lenders will
grant you, no matter how good your history and score, he explains. So if you
get an extra $5,000 added to one credit card line, that’s $5,000 worth of
credit you likely won’t be able to get from another lender, he says.

If you decide
to request a credit-line
increase, pick one card only, says Susswein. “You don’t want to do that on
multiple cards or you’ll look risky, and everyone will turn you down.”

6. How much
more credit do you really want?

Whether you ultimately decide you want a new credit card or an increased limit on an existing one, know how much more you need.

“Have a
determination in your own mind,” says McClary.

Know how much
you can afford, he says. “You need to do your homework before you have the
conversation to know how much you can afford,” McClary says.

“The lender is
going to want to offer you whatever they can offer you,” he says. Just don’t
let that larger limit tempt you into overspending, says McClary.

Opening three cards at once dings
credit score, short-term
, Credit utilization rules for
managing your credit score
, How
a high-limit card can boost your credit score

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