The average Canadian had $3,909 in credit card balances at the end of the first quarter of 2023. Whether you’ve maxed out your credit limit and need to make a purchase, or you’re looking to improve your credit score by improving your debt-to-income ratio, requesting a credit limit increase may be a solution.
Unfortunately, not all credit limit increase requests are approved. Banks look at a variety of factors when deciding whether or not to increase your limit. This includes your credit score, your current debt, payment history, and more.
If you’re hoping to increase your credit limit, there are a few things that you can do to improve your odds of your bank saying yes.
Keep reading to learn what you need to know to get a credit limit increase.
How to Improve Your Odds of Getting a Credit Limit Increase
Whether your credit score is already strong or your financial history is less than stellar, there are a few strategies that you can use to improve your odds of your bank approving your credit limit increase.
Update Your Current Income
One of the factors that creditors use to determine how much of a credit limit to provide is your income.
How much you make in a year allows creditors to determine how much you’re likely to be able to pay back. This is just one of the risk factors that they use when deciding whether or not to increase an individual’s credit limit.
It’s likely that if you’re looking to get a higher credit limit, you’ve likely had that credit card for a number of years. This might mean that your income, or your overall household income, has increased during this time.
If you’re hoping to increase your credit limit, one of the first things that you should do is update your current income. You can often find an option to do so on your online banking dashboard. Otherwise, you can call the customer service line or stop by your local bank to do so.
If your income increase was sufficient, you may be eligible for a higher credit limit right away. Some banks may also take some time to review your income increase before making a decision. You might receive this decision by email, a message in your banking dashboard, or by mail.
There’s no set amount of income that you need to receive in order to get a certain credit limit. It’s likely that the bank will review your new income alongside other factors, such as your payment history, to decide whether or not to increase your limit.
Updating your current income might not be enough for a bank to increase your credit card limit. However, it’s a good first step to take in showing that you should be eligible to borrow more money from the bank.
Use Your Credit Card Regularly
If you’re hoping to request a higher credit limit in order to make a big purchase, you might already be using your card regularly. However, if you’re using a credit line increase to try to improve your credit score, you might not be frequently using your credit card.
If this is the case, you should start using your card more frequently.
Sometimes credit card companies will close a card if it isn’t used for a certain amount of time. There’s no set amount of time that a card has to go unused before a credit card company will close the card. The company may not even notify you before closing your account.
Even if your account hasn’t been closed, if the creditor sees that your card isn’t being used, they may be more likely to opt to not increase your credit limit.
Always Pay Your Bill on Time
Paying your credit card bills on time will have an impact on your credit score. But it can also be a factor outside of your score that banks use to determine whether or not to increase your credit limit.
When you request a credit limit online through your bank, they’ll likely run a quick check on details about your account that are immediately available. This includes your income, your current credit line, your utilization ratioand your payment history. If you have a history of making late payments, the bank will be less likely to increase your credit limit.
Look for Other Ways to Improve Your Credit Score
If you’ve been denied a credit line increase in the past, the best way to improve your odds in the future is to work on improving your credit score. There are a number of ways to increase credit score.
Lowering your debt-to-income ratio is one way to improve your score. While increasing your credit limit can help with this, if you aren’t able to do that at this time, the next best thing is to work on paying down your debt.
We’ve already mentioned making on-time payments. But it’s also a good idea to check out your credit report to look for any potential mistakes. These could range from an inaccurate late payment being reported to a credit limit that’s lower than what you actually have.
Getting these mistakes fixed may instantly boost your score.
Another option that can help to improve your credit score is to avoid taking on unnecessary additional debt. If you find that you need cash to cover an unexpected debt, you’ll want to borrow only the amount you need. A loan from credit issuers like Kingcash allows you to borrow only what you need so that you aren’t taking on more debt than necessary.
Improving Your Credit Score and Increasing Your Credit Limit
Whether you want a credit limit increase to make a big purchase or to improve your debt-to-income ratio, these strategies can help you to improve your odds of getting approval from your bank.
If your purpose for requesting a credit limit increase is to make a big purchase, applying for a quick cash loan might be a better option. Unlike working to improve your credit score, these loans are available fast. You may be able to access your cash in as little as an hour. Click here to learn more about quick cash loans from Kingcash today!