Think you don’t have enough open credit? Have a major purchase coming up, like buying a car with a credit card to get more reward points? If so, you may want to give some thought to asking your credit card issuer for an increase in your credit limit, which is actually a pretty painless process. But before you do so, you may want to give some thought to a few things you should take care of before applying. Here are 5 things you should know before asking for a credit line increase:
1. Make sure you pay more than your minimum charge each month. Upon seeing you only pay the minimums, credit card issuers won’t be too keen to hand out even more credit that you can’t keep up with the payments on. They want to know you can afford your new higher limit.
2. Check your credit report and credit score before asking. I told you a few weeks ago how I ran my own credit report before applying for a new rental, so you may want to take a look to make sure that all the information on your report is correct and up-to-date.
3. Don’t ever go over your credit limit. Ever. Did I say ever? Ever. Never.
4. Use your credit card regularly, so the company can see that you are a constant user of the card. That way they can then see that you pay off your balances, pay on time, and never charge more than you can handle. Once they see a history of being responsible, they are more apt to agree to any increase requests you may have.
5. If you have a new credit card, I wouldn’t call them two weeks after you receive it and ask for an increase. It’s probably not going to happen. Use the card for 6-12 months before asking. For example, Wells Fargo makes you wait until your account has been established for at least one year.
After taking into account the above 5 items, it’s time to ask your credit card for an increase. There are a few ways you can ask them – online on their website, via telephone, or by stopping into a local branch. Personally I do as much as I can online, so I would use any online forms your bank has. But everyone has their own way of doing things, so use the method that is most comfortable for you. Keep in mind that when you apply the bank will probably ask you for and/or research your:
- Monthly rent or mortgage payment
- Assets – bank accounts, cash accounts, etc.
- Liabilities – cars, other debt, etc.
You should be ready to provide this information should you get asked. They will also likely pull your credit report to check out what you have been up to and to make sure you haven’t been putting in requests at any other banks (this could trigger a red flag). To any bank or credit issuer, you want to be seen as a competent “borrower”and not a “deadbeat, so it’s important to have your financial house in order before applying for a credit increase.
However, I wouldn’t go around asking for increases if you really don’t need or won’t be using them. The days of easy credit are over (for now), so if you don’t need the credit, don’t bother asking for it. Stick with what is already working for you if that’s all you need!
Photo credit: shawnzrossi