When is it time to ask for a credit limit increase?

Katie Genter is a digital nomad who has traveled full time since June 2017. She writes and edits stories about points and miles, and loyalty programs, often letting her personal experiences color these stories.

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There are many reasons to ask for a credit limit increase. For example, you may frequently spend up to your credit card's limit. Or, you may be looking to lower your credit utilization in order to boost your credit score and get a new rewards credit card.

Regardless of why you want to increase your credit limit, you may be wondering when is the right time.

Here's everything you need to know.

What is a credit limit?

Your credit limit is the maximum amount of credit your financial institution is willing to extend to you on a particular credit line. In other words, your credit limit is the highest balance you can carry on your credit card at any given time — although you may be able to spend over your credit limit in some situations.

The financial institution will generally set your credit limit when you apply for a new credit card. Your credit limit is based on multiple aspects of your credit history including your income, credit score and overall financial situation. The issuer wants to give you a limit that minimizes your risk of default while also giving you enough spending power to actually use your card frequently.

When can you request a credit limit increase?

Your credit card issuer sets your credit limit when you apply for your credit card. Some issuers require you to hold a card for a minimum amount of time before requesting a credit limit increase. And some issuers have policies regarding how frequently you can request a credit limit increase.

For example, if you have an American Express card, you can request a credit limit increase once your account has been open for at least 60 days. And, if you have a Capital One card, you generally aren't eligible for a credit line increase if you opened your account "within the past several months."

After that point, you may request a credit line increase anytime you like, but in general, Capital One doesn't change an account's credit line more often than every six months.

Other issuers such as Chase and Citi likely have policies regarding when they'll increase your credit line, but these policies aren't publicly available, so it's best to call customer service to discuss your available options.

Some credit card issuers may automatically increase your credit limit if you've used it responsibly for a certain amount of time. And, in the case of some secured credit cards, the issuer may even move you from a secured credit line to an unsecured credit line.

When is it smart to ask for a credit limit increase?

Financial institutions consider your current income, credit score and overall financial health when deciding whether to increase your credit limit. So, you'll have a better chance of success if you ask for a credit limit increase when these factors have improved.

In particular, you may have success asking for a credit limit increase when one or more of the following have occurred:

• You've received a raise or started a new job that increases your annual household income.
• Your credit score has improved significantly.
• You've paid off outstanding debt.
• You've been using the card responsibly and you haven't applied for any other credit recently.

When is it bad to ask for a credit limit increase?

When consumers face financial difficulties, banks often cut credit limits. As a result, you usually won't want to ask for a credit limit increase soon after any of the following have occurred:

• You've lost your job or received a pay cut that decreases your annual household income.
• Your credit score has decreased.
• You're at or close to your credit limit.
• You've recently missed a payment or submitted a payment late.
• You have recent inquires on your credit report for new credit lines, such as loans or other credit cards.

How long does it take to increase your credit limit?

Requesting a credit limit increase is usually quick and straightforward. Some issuers even allow you to do so online. But even if you can apply for a credit limit increase online, you'll want to call the number on the back of your card if you have any questions. For example, if you are looking to avoid a hard credit pull, you may want to call to determine if there is a lower credit limit increase that you can obtain with only a soft credit pull.

Whether you request a credit limit increase online or over the phone, you may receive a response in as little as 30 seconds or you may need to wait up to 30 days. Similar to a credit card application, some requests will be approved quickly by the issuer's algorithms, while others will require more information or review by a human.

How much of a credit limit increase should you ask for?

There are multiple aspects to consider when deciding how much of a credit limit increase to request. For example, you'll generally want to keep your credit utilization between 20% and 30% of your available credit. So, you may want to ask for a credit limit increase that will allow you to remain under 30% credit utilization as you use your credit card for everyday spending.

If you're looking to avoid a hard pull to your credit, you may want to ask your issuer if you can get a relatively small credit limit increase with only a soft credit pull. After all, it's easier to approve small credit limit increases, as these are less risky for the issuer.

But, if you have a particular purchase in mind or reason that you're looking for a specific credit limit increase, it's worth asking for a credit limit increase in the amount that you need. Based on your creditworthiness, your issuer may be willing to approve your request.

Does getting a credit limit increase affect your credit score?

Getting a credit limit increase can affect your credit score in two primary ways:

• Lower credit utilization: Credit utilization accounts for about 30% of your FICO score. Luckily, you can lower your credit utilization by increasing the amount of credit to which you have access. So getting a credit limit increase can positively affect this aspect of your credit score.
• A hard pull on your credit report: New credit accounts for about 10% of your FICO score. So, when you apply for a new line of credit — including some credit line increase requests — your credit score may decrease by 5 to 10 points for several months.

As such, your credit score may drop temporarily due to a credit limit increase request. But, even if your request isn't approved, the long-term impact will be minimal.

Bottom line

It's important to correctly time your request for a higher credit limit. After all, you want to make the request when the issuer has a compelling reason to say yes. If you follow the guidance in this article, you may be able to snag a credit limit increase on one or more of your cards.

Additional reporting by Stella Shon.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.