There are many reasons why people want to increase their credit lines. Whether it’s boosting your credit card score or just needing more funds, in this article, we will explain when the best time to request a credit line increase is as well as how to do it properly.
Let’s jump into it!
What is a Credit Line?
A credit line is a loan, similar to a credit card, that the bank provides you with and expects you to return within a previously set time frame. You can use this sum of money whenever you need it, but it’s important to know that you have a limit – you can spend only the sum that you’ve approved.
Before you’re approved a line of credit, banks will have to determine your gross annual income and go through all your credit accounts, including mortgage and any other loans to calculate how much of a credit line they can give you.
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When Can You Request a Credit Line Increase?
Note that not all banks will approve an increase of a credit line at any given time, so timing is of utmost importance. Take a look at the table below to get a better idea.
|Could be the right time||You may want to wait longer|
|Your salary has increased||Your salary stayed the same or it has decreased|
|Your credit score has been improved||You have already requested a different kind of loan|
|You paid most of your debt||You’ve had missed payments or you have accumulated debt|
|You are responsible with your money||You’ve already reached your credit limit|
Does it Affect Your Credit Score?
The thing is, when you apply for an increase the bank will request to look through your credit history to determine your spending habits and how likely you are to pay the debt on time. This way your credit score might go down. This type of inquiry is called a hard pull.
Keep in mind that lenders, landlords, and employers can access your credit score so this can have an impact on your future, so keeping a decent credit score is essential.
But requesting a credit line increase does not only have downsides, there are positive things as well, such as lowering your utilization ratio. This is the amount of money you owe to the bank compared to the amount available on your credit card. The lower the ratio, the higher the credit score.
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How Much of a Credit Line Increase do I Ask For?
The first thing to do before applying for an increase of a credit line is to calculate how much money you need, given how asking for more than you need can be a very bad idea.
Ideally, go for small increases. Not only are they easier to get approved for, but they’re also less risky when it comes to hurting your credit score.
How to Increase a Credit Limit?
Now that you have taken the time to consider applying for a credit limit increase, let us guide you on how to do it properly.
- First of all, you need to contact a customer service representative of your credit card provider.
- A pro tip here would be not to appear desperate. Just try to act natural and list the reasons why you deserve an increase in a credit limit.
- You can also mention a few things that make you creditworthy. For instance, make sure to inform the company that your salary has been increased if that’s the case. You can also talk about how you have always paid
- If you have a poor credit score, lower your expectations and ask for a lower increase than you previously wanted.
- If you get denied, wait six months before requesting a credit line increase again.
- After you get approved, your increase will show up after 30 to 60 days.
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So, what did we learn?
Getting the needed credit limit increase may be difficult, but not impossible and timing is the most important factor when you decide to request a credit line increase. What we recommend is, planning this thoroughly, checking your credit score, and making sure to pay off any debt that you think might be an issue for the approval process.
Some banks will automatically increase your credit limit once they get the information that you received a raise or when they notice that you are making your payments on time. Others may take some time to process the information.