How to increase your credit limit

If you’ve been using a credit card responsibly, you might be wondering about a credit limit increase. This is sometimes also called a credit line increase. There are two basic types of credit line increases: customer-initiated increases and lender-initiated increases. If you want to request an increase, you can typically do so online.

There are no guarantees that a credit card issuer will increase your credit limit. But there are some steps you can take to help you qualify. Learn more about how credit limit increases work and how you may be able to get one.

What you’ll learn:

• Your credit limit is the amount you have available to borrow on a credit card account.

• You might be able to increase your credit limit by asking for an increase, or your lender could give or offer one.

• Keeping your financial information up to date, making on-time payments and monitoring your credit reports may help you qualify for a credit limit increase.

• How you use credit determines how a credit limit increase will affect your credit scores.

Your credit limit is the maximum amount of money a lender allows you to spend on a credit card. As you use your card, your available credit goes down. When you make payments, your available credit goes back up, minus any fees or other charges.

Eligible Capital One customers may be able to go over their limits for occasional spending needs with no over-the-limit fee. View important rates and disclosures. If your Capital One account has access, you can use the Confirm Purchasing Power tool to check whether an over-limit purchase may be approved. You can also disable the ability to spend over your credit limit in your over-limit preferences.

Each lender sets its own credit limits. Here are some potential factors a lender may consider when setting your credit limit:

• Payment history: A lender may consider whether you pay your bills, including monthly credit card bills, on time. They will also look at whether you’ve filed for bankruptcy or had a debt sent to collections.

• Current accounts: When setting your credit limit, a lender may look at how many accounts you have open as well as the kinds of loans you have open.

• Account history: A lender may also look at the age of your current accounts and whether you’ve applied for a lot of new credit recently.

• Credit utilization ratio: Your credit utilization ratio is another important factor a lender may consider when setting your credit limit. This shows how much credit you are using compared to how much you have available.

• Income: A lender may also consider whether you make enough money to cover your monthly bill.

There are two types of credit limit increases: 

1. Customer-initiated credit limit increase: A customer requests additional credit from a lender. The customer needs to contact their credit card issuer and provide information about things like their income, employment status and monthly mortgage or rent payment. Typically, this can be done online.

2. Lender-initiated credit limit increase: A lender offers additional credit to a customer. In general, additional credit is usually offered or given to customers who have shown responsible financial habits and behaviors over time. But keep in mind that issuers set their own policies on credit limit increases.

Capital One cardholders can request a credit limit increase online. Make sure to have information such as your annual income, employment status and monthly rent or mortgage payment on hand. For more information, check out these guides on Capital One credit limit increases and Capital One’s credit policies.

It’s also important to note that Capital One accounts that have been open only a few months are generally too new to be considered. If an account has received an increase or decrease in the past few months, it typically won’t be considered either.

Whether increasing your credit line is a good idea depends on your financial situation and how you use credit. Here are a few potential pros and cons of a credit limit increase to consider: 

A credit line increase may help you: 

• Lower your credit utilization ratio: Credit utilization ratios are expressed as percentages. You can find yours by dividing the amount of credit you’re currently using by your total credit limit then multiplying that number by 100. If you keep your spending about the same but increase your credit limit, your credit utilization ratio will go down. And a lower credit utilization ratio can help improve your credit scores. 

• Increase your purchasing power: A higher credit limit can provide more flexibility to make a large purchase or cover emergency expenses when necessary. 

Here are a few potential drawbacks of a credit line increase: 

• Hard inquiries: Not all issuers conduct a hard inquiry for a credit line increase, but some might. Capital One, for example, does not require a hard inquiry for a credit limit increase. A single hard inquiry will typically only lower your credit scores by a few points, according to FICO®. But multiple hard inquiries may have a more significant impact.  

• Overspending: With more credit at your disposal, there might be a temptation to spend more. And that could make it harder to pay off your balance each month. Carrying a balance can affect interest charges, credit scores and more.

Here are a few things that may help improve your chances of getting approved for a credit limit increase:

Federal regulations require that credit card issuers use up-to-date income information when considering an account for a credit limit increase. Check your account details at least once a year to make sure they’re up to date. Your issuer may want to know information like your total annual income, employment status and monthly rent or mortgage payment.

Paying loans on time is one way to improve your payment history and credit scores. Payment history is one indication that you’re using credit responsibly. If you have trouble staying organized, consider automatic payments or electronic reminders to help you avoid missing payments.

It’s a good idea to try to make more than the minimum payment whenever possible. Doing so can help you save money on credit card interest and improve your credit utilization ratio.

Take some time to make sure the information in your credit reports is current and up to date. You can get free copies of your credit reports from each of the three major credit bureaus. Visit AnnualCreditReport.com to learn how.

You can also use CreditWise from Capital One to keep an eye on your credit. With CreditWise, you can access your credit report and credit score without hurting your scores. This can also help you catch any potential fraud or errors on your credit report. CreditWise is free for everyone, even if you’re not a Capital One cardholder.

When to ask for a credit limit increase is up to you. And remember, policies for credit limit increases differ from issuer to issuer. 

If you are eligible for a credit limit increase, your request may be approved immediately. But sometimes requests can take a few days to review. And your issuer may ask for additional information before it makes a decision about your request. Once your request has been reviewed, you’ll find out whether you’ve been approved for an increase through an email, an online notification or a letter.

It’s generally a good idea to avoid requesting a credit limit increase more than once every several months. This can help minimize the impact of hard inquiries on your credit scores. Some lenders also may restrict applications to one in a six-month period, though this can vary.

Keep in mind that requesting a credit limit increase doesn’t necessarily result in a hard inquiry. Capital One, for example, only does a soft inquiry for credit limit increase requests.

If you’re not financially stable or will be applying for other types of credit in the near future, it might be a good idea to hold off on requesting a credit limit increase. And if you have trouble practicing responsible spending habits, requesting a higher credit limit might not be a wise decision. Keep in mind that if your account is too new, you may not be able to request an increase. 

Here are some frequently asked questions about how to increase your credit limit:

Your credit card issuer may decide to increase your credit limit because of changes in your financial situation or improvements in your credit scores. Or you could request an increase yourself. 

A lender isn’t guaranteed to give you an increase when you ask for one. You’ll likely be asked to provide information like your income, employment status and monthly mortgage or rent payment. Your credit card company may weigh these along with other factors to decide whether to approve your request.

If you’re looking for a new credit card, Capital One can help. 

• See if you’re pre-approved for credit cards without harming your credit scores. 

• If you’re looking to build your credit with responsible use, explore cards for people with fair credit. 

• Earn unlimited 1.5% cash back on every purchase, every day with a cash back rewards card. 

• Monitor your credit report and score with CreditWise. It’s free for everyone, and using it won’t hurt your credit scores.