When to request a credit limit increase?

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If you’re considering increasing your credit limit, when should you ask your card provider? Or is it better to leave your limit as it is?

A credit limit is the maximum amount you can spend on your credit card. It’s determined by your credit score and how much your card provider thinks you can afford to borrow. However, things happen in life that mean you might need extra cash, like increased work expenses or car repairs.

There are some practical aspects to applying for a credit limit increase and some things you should think about before applying. Let’s deal with the practical aspects first.

When to request a credit limit increase

So when is the right time to ask for a raise?

Most card providers require you to wait a certain amount of time (three to six months) after receiving your card before requesting a credit limit increase. This is largely because they have already assessed your personal financial situation and decided what to lend you, and nothing has likely changed since that initial judgement.

However, once you have had your card for a while and have met your existing credit limit and made your minimum monthly payments, the card provider may see a personal credit history for you and may therefore be more likely to lend you more money. .

There are also restrictions on when you can request a credit limit increase if you’ve had one before. Most providers will ask you to wait a certain amount of time before you can request another raise, even if you were successful on your first request.

3 things to consider before requesting a credit limit increase

1. Have you stayed within your existing credit limit and made your minimum monthly payments?

These factors will be key in the provider’s decision-making process about whether to lend you more money.

2. Has your financial situation changed?

You will be asked to provide details of your income and expenses, so if they remain unchanged from when you originally took out your card, there may be no movement on your credit limit. Likewise, if you have taken out a loan or mortgage, this could impact how much a card provider is willing to lend you based on your overall debt commitments.

3. Does your card provider automatically increase your limit?

Some providers automatically increase your limit if you’ve managed your credit account well over a period of time. If there is no urgency to have additional funds, consider whether you could wait for your limit to be automatically increased and thus avoid the risk of your request for a credit limit increase being rejected.

Is there a risk ?

Before contacting your provider about a credit limit increase, you should take a moment to think about whether you really need one and what impact it might have on your finances.

Any increase in the level of debt you owe could have a negative impact on your credit score. Credit rating agencies take into account the total amount you have borrowed, so if you have a large credit limit on an existing credit card, this could work against you when applying for other cards or other financial products such as loans and mortgages. Any request you make to increase your credit limit could leave a mark on your credit report, especially if your request is denied.

Also consider that an increased credit limit could encourage you to spend too much and therefore lead to a level of debt that you are not comfortable with. If you’re going to apply for a credit limit increase, think about what you can afford and try not to borrow beyond your means.

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