How to Request a Credit Card Limit Increase

Canadians can request a credit card limit increase online, over the phone, or in person at a bank branch (if the card is issued by a bank). In some cases, your card issuer might even pre-approve you for a higher limit.

In this article, we discuss whether you should accept a higher limit when it's offered, give you step-by-step instructions to request an increase if you haven't already been pre-approved, and cover the pros and cons of making these decisions.

How to request a credit limit increase

There are 3 ways to request a credit limit increase:

• Call your credit card issuer's customer service line
• Submit a request through your online banking portal
• Visit a local branch

As long as you have had the credit card for long enough – typically 6 months or longer, depending on the issuer – and have proven you can pay off your balance in full every month, you should be approved.

Some issuers offer pre-approved credit limit increases, which you can accept or decline.

What to do before requesting a credit limit increase

Before requesting a credit limit increase, take these steps to prepare:

• Ensure your employment status and income are correct.
• Verify that all your personal information – address, phone number, etc. – is correct.
• Review your credit report for errors or fraud.
• Pay your current credit card balance in full, if possible.

Even though the request process is generally pretty quick, it's better to spend a few minutes double-checking so you don't run into any snags.

Factors lenders consider for a credit limit increase

When you request a credit card limit increase, your credit card issuer will evaluate several key factors to judge whether to approve your request. Here are the factors that lenders consider:

1. Credit score: Your credit score is one of the most important factors lenders consider. A higher credit score tells lenders you're a responsible borrower, making it easier to get a higher limit. A middle-of-the-road score of about 700 gives you a good chance of being approved for decent credit cards.
2. Payment history: Lenders want to see a consistent track record of on-time payments (even if they're only minimum payments). If you have missed payments or a history of late payments, your chances of approval may decrease.
3. Credit utilization ratio: Your credit utilization ratio measures how much of your available credit you are using. Keeping this ratio below 30% is ideal for your credit score and will help you get a credit limit increase. Increasing your credit limit can lower this ratio and boost your credit profile if your utilization is high.
4. Income: Income plays a key role in a credit limit decision. Lenders want to know that you make enough money to pay back what you borrow. If your income has increased since your last credit card application, update your issuer. It will increase your chances.
5. Debt-to-income ratio: The debt-to-income ratio (or DTI) compares your monthly debt payments to your monthly income. A lower DTI is favourable when applying for a limit increase, as it proves financial capacity to take on additional credit.
6. Length of time with current credit limit: How long you've had your credit limit can impact your chances of an increase. Issuers may prefer that you've had your account for at least 6 months before approving an increase, giving them time to review your habits and payment patterns. But each bank can be different – for example, TD and CIBC specify a minimum of 6 months, while RBC doesn't seem to list one.
7. Recent credit inquiries: If you've had many credit inquiries in a short time, lenders tend to treat this as a red flag. You may need to wait a while before trying again, as additional applications can continue to hurt your chances.
8. Overall credit profile: Lenders will review your entire credit profile, including all your accounts, credit mix, and outstanding balances. Having a well-rounded credit profile with various credit types will boost your chances.
9. Other issuer-specific policies: Outside of what you can control, lenders simply have their own policies for approving credit limit increases. Some issuers may be more flexible, while others have strict requirements. It's always a good idea to ask your issuer directly so you know what to expect when requesting an increase.

What to do if your credit limit increase is denied

If your credit card issuer specifies the reason you were denied, you can take the appropriate steps to resolve it. If not, set and maintain good personal finance practices, like these:

• Paying off your different credit products on time and in full
• Lowering your credit utilization
• Taking steps to increase your credit score
• Paying off anything that's currently in collections

A limited credit history or an underused card can also make it harder to get an increase. Using your card responsibly can help strengthen your case.

How a credit card limit increase affects your credit score

Before you rush to place the request, take a moment to see how a request for a credit limit increase affects your credit score. You may assume it will help improve your score, but it could potentially affect your credit utilization ratio and have a negative impact.

First, don't be surprised if your score takes a slight hit when the card issuer pulls your credit report to evaluate your request. Your score may drop if they do a hard credit check – but if they're only doing a soft pull, you shouldn't see your score fall.

A credit limit increase will have a bigger effect on your credit utilization ratio, a major factor in determining your credit score. This percentage represents how much of your available credit you're actively using, and lenders and credit monitoring bureaus like to see this below 30%.

When it comes to credit utilization, a credit limit increase can give your score a boost as long as you don't max out the card.

For instance, if you have a credit card with a $5,000 credit limit, and you have a balance of $2,500, you're using 50% of the available credit – more than the bureaus like to see. However, if you're approved for a credit limit increase and the issuer raises it to $10,000, you're only using 25% of the available credit.

As you can see, it's incredibly important that you don't increase your spending just because your credit card limit is higher.

Pros and cons of a credit limit increase

Here are some reasons you might consider a credit limit increase:

Pros

• Lowers your credit utilization: Your credit utilization shouldn't exceed 30%. Increasing the amount of available credit you have will lower your credit utilization rate, which will positively impact your credit score.
• Cheaper and easier to get loans and additional credit: A higher credit score makes it easier to get loans and secure favourable loan terms. This is because you'll be seen as more reliable and more likely to pay off the loan.
• Gives you access to emergency funds: If you find yourself in an emergency and can't pay a bill in cash or with your current bank account balance, a higher credit limit lets you cover the purchase.
• Helps you earn more rewards: If you have more wiggle room to put more purchases on your credit card, you'll be able to earn more credit card rewards. You'll be on track to get that free flight sooner or earn much more cash back.
• Allows you to make large purchases: A higher credit limit means you can make bigger purchases. Really, high-value purchases are best placed on a credit card anyway, because of the extended warranty and purchase protection many cards include. Some cards even have price protection, which can refund you the difference (up to a certain maximum) if you find a lower price soon after your purchase.
• Helps you avoid a credit score hit: Opening a new credit card will trigger a hard credit check, which can slightly impact your credit score. A credit limit increase may or may not require a hard credit check – so your credit score could stay the same. But whether it's a soft or hard check is at the lender's discretion.
• Avoid overlimit fees and/or declined transactions: If you regularly reach your credit limit but can still pay off the card, a higher limit prevents your transactions from being denied or you from being charged fees for going over the limit.

Cons

• It's tempting to overspend: You can rack up a higher balance with the extra freedom. If you aren't able to pay it off in full every month, you'll get hit with interest charges.
• Possible impact on your credit report: Some credit card issuers may perform a hard inquiry on your credit report when you request a credit limit increase. Although a single inquiry may not significantly affect your credit score, multiple inquiries in a short period can temporarily lower your score.
• Increased risk of identity theft: A higher credit limit can make you a more attractive target for identity thieves. If your credit limit increases, thieves could cause a lot more damage if they gain access to your accounts. It's crucial to stay vigilant to avoid fraud.
• False sense of security: A credit limit increase can create a false sense of security, leading you to take on unnecessary debt. While the ability to make larger purchases may seem appealing, you should ask yourself whether you need the limit increase or if you're just adding to your debts.
• Can impact your credit mix: If you're hoping to see your score improve with a higher credit limit but it barely moves, consider the types of credit you have. Credit monitoring bureaus are more interested in seeing a diverse mix of credit types, such as personal loans, mortgages, and credit cards, than in seeing only credit cards.

Should I accept a pre-approved credit limit increase?

Sometimes, banks offer pre-approved credit limit increases. If you accept, the increase will be applied immediately. This offer typically means that your bank views you as a reliable customer who consistently pays off your balance on time.

In many cases, accepting a pre-approved credit limit increase can be beneficial. It can improve your utilization ratio, potentially upping your credit score.

However, while a higher limit may seem advantageous, spending responsibly is essential. Higher limits could increase the temptation to spend, and overspending could lead to disastrously high debt and interest charges.

If you don't need the extra credit, or if you aren't sure you can manage it responsibly, there's nothing wrong with waiting. Keep up your good habits, and you can always consider it later.

FAQ

Is it good to increase a credit card limit?

If you can avoid increasing your spending, a credit card limit increase is generally a very good thing for your credit score. Not only can a higher limit show credit monitoring bureaus that you're responsible, but you'll have more opportunities to earn credit card rewards and have more wiggle room with your spending.

How do I increase my credit card limit?

If you've been pre-approved, just accept the offer. Otherwise, you can contact your credit card issuer online to request the increase, or try reaching out by phone. If your credit card is issued by a bank, you can visit a branch to request the limit increase in person.

How do I make a Capital One credit card limit increase?

According to Capital One, the easiest way to request a credit card limit increase is online, through their website or on their mobile app. Follow the prompts and answer questions about your income, housing expenses, projected monthly spending, and your employment status.

Is it hard to get a credit limit increase?

It isn't necessarily hard to get a credit limit increase so long as you've been responsible with your credit card and you have the income to back up a request. Card issuers want to see that you've always made payments on time and aren't currently maxed out.

Is a $30,000 credit limit good?

Yes, a $30,000 credit limit should make it easy for you to make big purchases without going over the card's limit. Most card issuers view any credit limit over $5,000 as a high credit card limit, so $30,000 shows that lenders view you as responsible.