Don’t be disheartened if your credit limit isn’t quite what you hoped it would be - a higher allowance could be just around the corner.
Every credit card has a credit limit attached to it; it’s what allows lenders to control how much you borrow. If your credit limit no longer fits your needs (or never has), you can in fact increase your credit limit. We’ll explain the much anticipated ‘how’ shortly.
What determines my credit limit?
The limit you’re given depends on your credit history. If you’ve got a good track record of managing credit - whether that be a credit card, loan, mortgage or store card - lenders are more likely to trust you with a larger credit limit, because they’ll be more confident they’ll get all their money back.
If you’ve a patchy credit history though, you’ll probably find the limit’s a bit lower, and this reflects lenders’ uncertainty in you as a borrower. But don’t worry, credit limits certainly aren’t set in stone.
How to increase my credit limit
If you want to increase the credit limit of a current card, firstly, you need to prove to your provider that you’re a safe bet.
Put yourself in their shoes. If your credit file shows you skip payments and exceed the credit limit they have given you, it’s hardly going to fill them with confidence, right?
To start showing you’re a reliable and responsible borrower and improve your chances of a credit limit increase, follow these golden rules:
Usually, it’s a two-way street, but this will depend on your provider. If your credit card company’s noticed you’re coping just fine with your current credit limit, they might come to you and offer you a higher allowance. And remember, you don’t have to accept it if you don’t want it.
If they don’t, or if you’re fed up of waiting, there’s nothing stopping you from making the first move. If you don’t ask, you don’t get so get in touch and just ask for a raise - but make sure you read our ‘When to increase my credit limit’ section below first.
Should I increase my credit limit?
Only you will know the answer to this one, but here are a few things you should consider:
With a higher credit limit comes more temptation, and if this isn’t something you feel you can manage safely, it’s perhaps best to stick with your existing credit limit.
Spending more than you can afford to repay can turn into an unhealthy and potentially dangerous spiral. The more you spend, the more you’ll have to pay interest on, the more expensive the borrowing becomes, and the harder it is to clear.
If you’re asking for a credit limit increase (rather than being offered it), your lender will check your credit history to see how well you’ve been handling the account so far.
This can leave a hard search on your credit report. Having lots of hard searches on your report will be available for all future lenders to see and could damage your credit score.
It’s not all doom and gloom though. Increasing your credit limit can also benefit you by:
Giving you access to more funds in the event of an emergency;
Depending on your lender, it could unlock more rewards; and
Asking for a credit limit increase is easier than applying for a whole new credit card.
When to increase my credit limit
If you want to boost the odds of your credit limit request being accepted, timing is key.
1. When you’ve got a healthy credit score. The better your credit score, the better your chances of getting a ‘yes’. If you’ve already got a good credit score, great! If it’s in
2. If you’ve got a good track record. If you’ve recently missed a payment, asking for more money isn’t the wisest move. Instead, pledge to be a more responsible borrower, stick to making payments on time and in full every month, and then consider asking further down the line.
3. After you’ve been with them for a while. It’s usually best to wait until you’ve been with your credit card provider for a good few months. This gives them enough time to paint a decent picture of what type of borrower you are.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.