Credit card issuers are now relaxing their tight lending requirements that were put in place a year ago as the pandemic erupted. With millions suddenly without jobs, issuers had faced a conundrum: would consumers begin to rely on credit cards to afford basic living expenses?
But the improving economic climate, coupled with a surprising record drop in credit card balances, means that issuers are now in a hurry to sign on new customers. A new TransUnion report found that credit card originations are on the rise again and The Wall Street Journal reports that card issuers have spent more on marketing this year than last and are mailing out more credit card solicitations. Banks like Capital One are increasing cardholders' credit limits.
If you had your credit card limit cut last year, or you've been wanting to ask for a credit limit increase, now may be an opportune moment to do so. Your approval chances of getting additional credit are even better if you a) have at least agood credit score(661 to 780) or b) have a higherincome than when you applied for the credit card.
What to consider when requesting a credit limit increase
A higher credit limit provides opportunity to spend beyond your means, so it's important that you are confident you can stick to your budget if your spending power increases. Asking for a higher limit could also result in ahard inquiryif your card issuer pulls yourcredit reportin the approval process, which may temporarily knock five or so points off your credit score.
The good news, however, is that once you get a higher credit limit it's easier to keep a low credit utilization rate, since a high limit raises your overall available credit. In turn, this can improve your credit score.
Your utilization rate is calculated by dividing your total outstanding balances across all your cards by your total credit limit. You then multiply that number by 100 to get a percentage. So, the higher your credit limit and the lower your card balances, the lower (and better) utilization rate you'll have.
Did your request for a credit limit increase get denied?
You can typically expect a quick answer from your bank as to whether your request for a credit limit increase gets approved or denied.
If you get denied a higher credit limit, we recommend waiting six months before trying again. You can use this time to try to increase your income through a side hustle or work to improve your credit score by paying your monthly bills on time.
Make sure to sign up for the free service *Experian Boost™, which allows you to get credit for your on-time bill payments for things like your cell phone, internet, cable, utility (gas, electricity, water) andstreaming payments likeNetflix®,HBO™, Hulu™ and Disney+™.
Experian Boost™
On Experian's secure site
Cost
Free
Average credit score increase
13 points, though results vary
Credit report affected
Experian®
Credit scoring model used
FICO® Score
Results will vary. See website for details.
How to sign up for Experian Boost:
- Connect the bank account(s) you use to pay your bills
- Choose and verify the positive payment data you want added to your Experian credit file
- Receive an updatedFICO® Score
Learn more about eligible payments and how Experian Boost works.
High-limit — and other — credit cards to consider
Credit card issuers don't typically advertise their credit limits, but some will include a minimum credit limit in their pricing and terms. Cards branded Visa Signature® or Visa Infinite® typically offer a starting credit limit of $5,000 or $10,000, respectively, which we consider high limit.
Two popular cards in these categories are the Chase Sapphire Preferred® Card (a Visa Signature card) and the Chase Sapphire Reserve® (a Visa Infinite card, a tier above Signature). Though Chase doesn't publish credit limits on its site, travel credit cards generally have higher limits.
You won't know your given credit limit until your application is approved, and a lot weighs on your credit score and income.
For those who don't have the good or excellent credit to qualify for one of the Sapphire cards or another travel card, consider a product like the Capital One QuicksilverOne Cash Rewards Credit Card (see rates and fees). While cardholders won't have a high credit limit right away, they get the opportunity to increase their limit over time. Capital One automatically considers you for a higher credit limit after six months of on-time payments, and onememberonmyFICO® Forums said that cardholders may receive a $100 increase after their second or third billing statement.
Read more
Here’s what to do if you didn’t get the credit limit you wanted
What is an average credit card limit?
Here’s the average credit limit you can expect to get when you open your first credit card
What happens if you try to spend more than your credit limit
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
