What to do if your request for a credit limit increase is denied
It can be quite frustrating to hear that your request for a credit limit increase has been denied. After all, rejection of any kind is never fun. Fortunately, you still have a few options. Let’s explore a few of them.
Why would you want to increase your credit limit?
There are two main reasons you might want to apply for a higher credit limit:
- You are looking for a way to access additional funds, perhaps to make a large purchase or to cover an unforeseen expense.
- You are looking to increase your credit score by improving your credit utilization rate.
Why would your request for a credit limit increase be refused?
Your request may be refused for several reasons. Let’s take a look at some of the most common.
Your account is too recent
Many credit card companies won’t consider you for an increase in your credit limit unless you’ve had the card for at least three to six months (or even longer). If you’re wondering when is the best time to talk to your lender about an increase, take a look at our article on when to ask for a credit limit increase.
You have a low credit score
A low credit score indicates that you are too risky for credit and are not currently worthy of more credit. But it can be fixed. Discover our tips for improving your credit score.
You have a history of late payments
Late payments indicate to the credit card issuer that you are already having problems managing your existing credit.
You are used to only making minimum refunds
If you only ever make minimum repayments, your issuer might naturally assume that you can’t really afford a higher credit limit.
Your income is too low
Issuers will often use your income to determine whether to increase your limit. If it is too low, your limit is unlikely to be increased.
You have too many recent credit requests
It could be an indication that you are taking on too much credit or that you are in some kind of financial problem that you are desperately trying to overcome by using credit.
You have too much credit available
Some people might be tempted to overspend and thus get into heavy debt when they have too much credit available. A higher credit limit will only increase that risk, and some lenders are just not willing to take the risk of increasing your limit.
What can you do after your request for a credit limit increase is denied?
Your best bet is to write down any issues the company has reported for your denial and take action to resolve them. It could mean:
- Make an effort to pay off some of the debt you already owe.
- Better make your payments on time.
- Pay more than the minimum amount each month.
- Use your cards more regularly. This will allow the issuer to better understand your spending and reimbursement behavior. You can show that you are a profitable cardholder and that the issuer could benefit from an increase in your limit.
- Checking your credit report for errors. Credit reports contain a lot more errors and inaccuracies than many people realize. If you’re sure you’ve managed your credit well but are still rejected for a credit limit increase, order your free annual credit report from the three major bureaus (TransUnion, Equifax, and Experian) to check for errors and to correct. .
Is there an alternative to increasing the credit limit?
Yes. You can apply for another credit card with a higher limit. This is a good option if your credit score is in good condition. If you’re looking to make a big purchase, consider a 0% credit card that offers an introductory interest-free period on new purchases.
Keep in mind that a declined credit card application will affect your credit score, as each request records an extensive search on your report. Therefore, only apply if you are sure about your chances of getting approved.
To take with
While it can be frustrating to be denied a credit limit increase, it can also be a learning experience. By understanding the reasons for your rejection, you can take steps to correct or avoid them in the future.
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