How to increase your credit limit

Why would you even want to increase your credit card's credit limit? Having a higher credit limit on your credit cards can increase your credit score. That is if you do it without adding new credit cards into the mix and with keeping your spending in check and balances on the cards low.

This is because when calculating your credit score, part of the calculation involves credit utilization - a percentage of how much you owe on the card/s to what the total limit on the card is. The lower the credit utilization the better your credit score. So, if your limit is $10,000 and your balance is $5,000 your credit utilization is 50%. If you get your credit limit increase to $20,000 and still have the $5,000 balance - the credit utilization just dropped to 25% and up goes your credit score.
 
How to increase your credit limit

• Wait - if you have a new/er card you will need to show a few months of responsible spending and paying on-time and not going over the limit. Once about six months is up you can request an increase to your credit limit from the card company
• Use it - keep using the card - especially if it is a newer one, even if it is just for small purchases, and then pay the balances on-time or early.
• Ask for it - some companies allow you to ask for a credit increase online, some even without any credit check. You can also call and ask. Make sure to ask if they will pull your credit i.e. make an HARD inquiry - which can hurt your credit score. If they do not do a hard inquiry you can continue with your request to increase the credit limit.
• Do it again - wait a few months - six months or so - and ask again.

Some companies also use their own system in offering automatic credit limit increases without you even having to ask for it. This is typically done by the company monitoring your use of the card, paying on-time and otherwise exhibiting good account management.