The amount of credit you have is essential, particularly in how it affects your overall credit score. The higher your credit limit, the more significant the impact it has on your credit utilization ratio. So for example, let’s say you have a $10,000 credit line. And you spend $5000 of it in a given month. This means that your credit use utilization ratio is 50%, which is considered to be quite high. However, if you can increase your credit limit to $20,000, this effectively lowers your credit utilization ratio to 25%. While this is still considered somewhat high, it’s better than 50%. You can see that a credit limit is essential.
Keeping your credit limit in mind is therefore critical, especially if you want to boost your overall credit score. How do you go about increasing your credit limit? This is a question that many credit users have. There are a few simple strategies that you can use to help get a credit limit increase. Keep reading to find out more…
Ask for a Credit Limit Increase
The simplest way, of course, is to just ask for an increase. Let’s say you’ve been with a credit card company now for a few years. Your current credit limit is $5000. If you have made timely payments and used your card responsibly, then asking for a credit limit increase could be a viable way of getting one. You can simply call customer service and request a credit limit increase. Some credit card companies offer you an online option for requesting an increase in your credit limit.
Strategies for Getting that Increased Credit Limit
Before you can ask for a credit limit increase, you have to show the credit card company that you are worth the risk. That is to say, being a responsible credit card user is going to go a long way toward helping you get that increased limit. Some factors to consider as you try and build your credit:
Make sure your payments are timely
Falling behind on your payments and having too many late payments is definitely going to be a red flag to a lender or credit card company. Paying on time every month will help show that you are a responsible card user and consequently deserve a credit limit increase.
Pay more than just the minimum
While there are certain times when paying the minimum is inevitable, if you can pay more, even a little bit more, this can help you build a case for why you deserve an increased credit limit. Not to mention, if you can pay off your credit card every month, you will save a significant amount in interest.
Ensure that your credit report is up to date
Regularly checking your credit report is extremely important for a number of reasons. And if you are looking for ways to increase your credit limit, staying on top of what is in that report is going to be imperative. Look for any errors or inaccuracies. Report these to the credit agency immediately. Make sure your personal and contact information is current and up-to-date as well.
Update your information with the credit card company
Your income information is going to be used to determine what your credit limit should be. If you’ve had a change in income, you must update that information with the credit card company. Some companies will also ask for updated information on your mortgage or rent payment as well as your overall employment status.
First Union Lending is Here to Help
We work with a variety of small businesses across the United States. Our job is to help companies thrive and ultimately grow. This is why we do what we do. We offer short-term loans, lines of credit, and merchant cash advances, among other financing options. Even if your credit score is less than ideal, we might still have a funding solution for you. This is because we take a big-picture approach to commercial lending. There will be a representative on hand to walk you through the process every step of the way. Call today.