How to Increase Your Credit Limit: A Complete Guide

When you first apply for a credit card, you will typically receive a low credit limit, which can be disadvantageous if you need to make big purchases or spend for an emergency. No need to fret, though—you can increase your limit in various ways, especially if you’re a responsible credit cardholder.

Increasing your credit limit has several benefits, with the best one having more flexible purchasing power. However, remember not to exceed the limit, or else you have to pay extra fees.

If you’re wondering how to increase your credit limit, the infographic below breaks down the numerous steps and details while discussing the benefits of a higher credit limit.

Benefits of a High Credit Limit

Apart from being able to purchase more in a month, having a high credit limit has other advantages.

1. It lowers your credit utilization
   Your credit score may get a ding if you use up almost your entire credit limit. For instance, if your credit limit is ₱50,000 and you’ve already spent ₱30,000, you’ll get a notification saying that you’re nearing the limit since lenders will consider you at risk of accumulating debt.
   
   A high credit limit card will reduce the percentage of funds being used. This can lower your utilization ratio and improve your credit score. However, if you wish to increase your credit limit, it’s best not to exceed a specific percentage of your credit limit. We’ll discuss this more in the next sections.
2. You have better chances of getting approved for credit cards, loans, or mortgages
   When assessing your risk level as a borrower, lenders sometimes consider your credit limit. If you have a high credit score, you have a better chance of getting approved for credit cards, loans, and mortgages. You may also receive lower interest rates since the lender considers you a low-risk borrower.
3. It lets you make large purchases efficiently
   Many credit cards allow you to rack up points and rewards that can be used for future transactions. Additionally, some offer consumer protection if there are issues with the purchase. These include warranties, price protection, and coverage for damaged or stolen goods, which are incredibly helpful for large purchases.
4. You’ll earn rewards more easily
   One of the responsibilities that any cardholder should follow is paying off the credit card balance on time and in full. If you consistently do this, the issuer can increase your credit limit, allowing you to make more transactions that lead to rewards like travel miles, cash back, and points.
   
   The rewards can reduce your spending by helping pay for vacations, gifts, clothes, and other miscellaneous purchases. If you don’t use your card for everyday expenses, you can instead use it to pay for recurring costs such as rent and utility bills.
5. It can help during emergencies
   A high credit limit provides you with more excess than your usual spending amount, giving you some cushion for emergency expenses. An example is if you need to change plans during a vacation and come home earlier. Your excess credit can cover your ticket purchase without worrying about going over the limit.
6. You can close your other credit cards, which makes debt management easier
   Having a high credit limit on one credit card saves you the trouble of owning numerous cards. You don’t have to worry about managing multiple accounts and racking up huge debts to different lenders. Having only one card helps you stay organized with your purchases since it’s easier to track your transactions.

How to Request Credit Limit Increase

With the benefits out of the way, you may now be wondering how to increase your credit limit. The section below discusses a few steps you can follow.

1. Call your card issuer
   One of the simplest steps to request a credit limit increase is to call your card issuer first.
   
   There should be a number at the back of your card that you can call to ask a customer service representative if you’re eligible for a credit limit increase. The representative may ask if your income has increased and the reason for your request, so prepare your answers.
2. Make a request online
   If you want to request an increase online, all you have to do is sign in to your account and search for the option to submit a request. There may be sections that you must update, one of them being your income. If your pay has increased, there is a higher chance your request will be granted since it shows greater financial security.
3. Check if your issuer offers automatic limit increases
   Some issuers provide responsible cardholders with an automatic credit limit increase, especially if they have had the card for some time. Inquire your lender since you may want to avail a higher credit limit sooner than later.
4. Increase your security deposit for secured credit limits
   You can raise your credit limit if you have a secured credit limit by paying your security deposit. Each issuer has a different process for requesting limit increases, so call your issuer to find out the exact steps to take.
5. Apply for a new card with a higher limit
   If you have been maintaining good card use habits, such as paying in full and on time, your credit score may be enough to apply for a new card with a higher limit. Your issuer will likely grant you better credit card terms, such as a higher limit and more rewards since they already know that you’re a responsible cardholder.

Tips to Improve Your Chances of Getting a Higher Credit Limit

Applying for a higher credit limit isn’t as easy as you think—there are prerequisites. But, don’t worry; the section below lists some helpful tips to increase your chances of approval.

1. Pay your bills on time
   This is the easiest way to increase your credit card limit. Issuers will review your credit account after a specific period and decide if you are eligible for an increase based on how you’ve been handling your finances.
2. Time your request strategically
   It isn’t smart to ask for a credit increase if you’ve only been a customer for a short time. Requesting early will make you look desperate and may raise suspicion to the issuer. Take some time to establish trust between you and the lender, and eventually, they will consider you eligible for an increase.
3. Prepare documents that support your creditworthiness
   Applications for a credit card limit increase will go through the bank’s evaluation process. Factors such as your credit score, income, and employment status will be considered. Additionally, if you have been with the bank for around 12 months, it shows them that you have been paying on time.
   
   Pair these with other supporting documents you can provide, and you will have a high chance of receiving a credit increase.
4. Don’t ask for too high an increase
   If you want to increase your chances, don’t ask for too much. You can ask for a 10% or 20% increase, but anything higher may raise suspicion and get your request denied.
5. Be a loyal customer
   As mentioned earlier, some factors play a role in determining your eligibility for a credit increase. If you have been with the bank for a year or two or more, the bank will consider you for an increase since it shows that you have been paying on time and maintaining a good track record of finances.
6. Wait for a salary increase
   Of course, if your income has increased, there is a higher chance that the issuer will provide you with a credit boost. However, you need to time your request to have the best odds, as stated earlier. If your income has gone up, but you have not been with the bank for a long time, it might be best to wait a couple of months.

FAQs about Credit Card Limits

1. How is credit limit determined?
   Factors such as your credit score, payment history, income, and utilization or expenses all play a role in determining the credit limit you will have.
2. What happens if you go over your credit limit?
   If you go over the credit limit, the bank may charge you an over-the-limit fee or decline your succeeding purchases. Some issuers don’t let you go over at all, so your payment won’t go through once you’ve maxed out your balance.
3. Do fees increase along with your credit card limit?
   A higher credit limit doesn’t involve higher fees. Your credit card fees and other charges remain the same if you retain your current credit card.
4. How much of my credit limit should I use?
   You want to make sure that you never go over the credit limit, and that the safest credit utilization rate is below 30%.

Maintaining Responsible Habits and Establishing Trust

Increasing your credit limit can be a simple process if you develop good spending habits and are responsible with your remaining credits. These two aspects allow you to consistently make full payments, leading to stronger trust between you and the issuer.

Following the steps above will allow you to maximize the perks of a credit card, including the chance to achieve your personal financial goals.

If your request for a credit card was rejected or you want to switch credit cards, inquire with RCBC to learn how you can apply for a credit card with a higher limit. Contact us today!