Not everyone wants a higher credit line but if you are planning a family vacation, redecorating or remodeling your home, you may need to spend more than usual. The tips below explain what you can do in order to get a higher limit on your credit card.
Check Your Payment Record First
Before asking for an increase in the amount you can charge, take a look at your payment record. Have you paid your cards on time and established yourself as worthy of credit? That will be the first thing your lender will want to know.
If your account is at or near the present limit month after month or you’ve paid the bill late, you may not be able to raise the ceiling. When you request your credit line increased, clearly your goal is to have more spending power.
If you have a good payment record and have on occasion paid off a financed item or paid the account down significantly it’s likely your lender will be willing to work with you. It may be that all you need to do is call and ask for more credit to be added to your account.
Your bank may increase your credit line as a permanent change on your account or may give you a temporary increase that will cover the one large purchase you want to make. They may give you the option of a permanent or temporary increase and leave the decision up to you.
Temporary or Permanent?
If you are asked to choose temporary or permanent credit line increase, keep in mind your past use of credit accounts. Can you trust yourself not to use that extra credit except for the purpose intended? If not, choose a temporary increase for this one time purchase.
Another reason to ask for a higher credit line on your card is to reduce the percentage of credit you are currently using. If your balance on your account is $3000 and your credit line is $4000, the credit bureaus see that you are using 75% of the credit available to you. That’s not good as the preferred number is 50%.
It’s a little known fact (and doesn’t seem to make sense) but it’s an important item in your credit rating. Though your lender has told you charging up to $4000 is just fine – the credit bureau sees increased risk for anyone using more than 50% of their allowed credit.
In this case, you might ask that your credit line be raised to $6000. Without doing anything else, you have increased your credit score as you now owe only 50% of the amount you can charge. This can be a huge bonus for you without costing you a cent in debt or payments.
Only You Know How Much Debt You Can Carry
If you have a great payment record, it’s likely your lender may raise your credit line without being asked. This may be good – or bad. Only you know what you are able to pay and how much debt you can comfortably carry from month to month.
If you see an automatic increase in your credit account as permission from your bank to spend more money, you might consider declining the increase.
Summary
Remember – the higher your credit line, the more tempted you may be to use that credit card. The higher your debt, the longer it will take you to pay it off.
The longer it takes to pay it off, the more your lender will earn in interest from you. Best practice is to request an increase only when you need it for a specific purpose or when the higher limit will benefit you.
I did the mistake to spend too much than I could afford and it didn’t took long time before I was chasing bad credit card offers because my credit was totally damaged! Don’t do the same mistake as I did!
