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You’ve been minding your credit score and are starting to see the results. With good behavior and time, you’ve managed to raise your average credit score out of the 630-689 range and into the 680-720 “good” range. Good for you!
So what comes along with that? More credit offers, better credit card offers and perhaps a higher credit limit on existing credit cards. None of these is guaranteed, but a higher credit limit may be easy to secure and boost your score even more. Here’s how your credit limit can increase in the good range.
Automatically by card issuers
Often when your credit score increases, credit card issuers will automatically increase your credit limit. Even if your score stays relatively stable and you’ve proven to be a low-risk customer, they might periodically offer you a higher credit limit. Most credit card issuers look at your history with any credit card after about six months of opening the account.
Keep in mind that each lending institution caps the amount of overall credit they extend to you at any given time. So if you have two credit cards from the same bank, the overall credit limit increase may be divided between the two or just extended on one card. Either way, if you have a long enough credit history and your score has gone from fair to good, chances are you’ll get a credit limit increase soon.
When you ask
If your credit has gone from fair to good, it’s not unreasonable to ask for a credit limit increase. If you decide to do this, choose one card and choose wisely, because you don’t want a bunch of inquiries into your credit history all at once.
Don’t ask for an increase on a card you’ve had for less than six months, and don’t ask for a huge increase, either; about 10% to 25% is a good rule of thumb. Be sure you’re in control if you do increase your credit limit, and remember that it’s not free money. You’ll want to be sure you can pay off as much as you put on it each month.
Credit limit transfers
There is one more option if you really need more credit. Say you have two credit cards from the same issuer, and you want to increase the limit of just one. Some issuers will let you reduce the limit on another card in exchange for a credit limit increase on that one.
Some people even apply for a new credit card from a current issuer with the intent of transferring part of the limit to an existing card. Don’t do this frivolously, however. Each new inquiry takes a toll on your credit history and credit score.