Increase credit limit

[pmferrari]

Hi everyone. My credit history is farily new although my credit score is at 700īs. My first credit card was capital one and my credit limit is 300. Because I did not know about credit procedures I also applied for many other cards at the same time and I was declined. I have had this credit card for almost 9 months already and because I went over the limit a few times they do not want to increase my limit. However I was never late on a payment and only once I let my statement balance was over the 300. Sorry I went too long, but what can I do to get a credit card with a better limit? Obviously I am able to manage a better credit line. Thanks.

[skydivingchic]

Ummm - how do you figure it is "obvious" that you are able to handle a larger line of credit when you have exceeded the limit "a few times" in only a nine month period? You need to pay attention to how much you have charged and stop charging when you get near the limit. Period. Once you can demonstrate to the CC companies that you can use and pay CCs per the agreement (of which the limit is a part), then they may be willing to raise your limit.

By the way, part of your FICO score is based on your debt to credit ratio, lower being better. So, assuming that this is your only line of credit, when you have a $300 balance, your debt to credit ratio is 1:1. Lenders like to see much lower ratios - like using only 10% - 30% of your available credit. Carrying that high a ratio will drop your credit score, making credit limit increases less likely.

Editted to add:
When I first got a CC, it had a small limit, too - $500 if I recall correctly. I would charge something small each month - a trip to the gas station, a CD, a trip to the grocery store, a restaurant meal, etc. Then I paid the bill in full and on time. With a consistent history of paying on time and a low debt to credit ratio, the CC companies repeatedly raised my limit without me ever requesting it. Now, the limits on most of my cards are WAY higher than I would ever charge. I have never once had to request a limit increase. Just a month or two ago, even with the credit markets the way they area, I got a notice that one of my cards raised the limit by another several thousand dollars. You just have to demonstrate that you can responsibly use a CC and play by their rules.

[kork13]

You can call your CC company and request a credit line increase. Some companies will automatically bump them up periodically (this just happened for one of my cards this last month), but not all will. Generally, if you request it of them and you have a good history with them/good credit in general, they will increase your limit.

[angel12]

are u sure i will increase my CC limit,it is right?

[Alex_Adviser]

The following are some important steps to increase your credit card limit:

Step1
Read the terms and conditions of your credit card and stick to them.

Step2
Know the implications of increasing your credit card limit. While you will be able to make larger purchases, you will also be carrying higher balances and therefore accruing larger interest charges. To keep your credit in good standing, you need to be able to keep up with the higher payments.

Step3
Pay more than your monthly minimum balance. Aiming to pay the entire outstanding balance not only will improve your standing in the eyes of your creditors, but will also help to reduce your finance charges. Since finance charges are assessed on the balance left on your account after your grace period is over, paying it in full will help you avoid extra fees.

Step4
Avoid paying bills late, and keep your spending within your credit limit. Your goal is to show credit card companies that you are a good credit risk. Having a record of paying in a timely manner and staying within a budget will cast you in a favourable light when you ask to increase your credit card limit.

Step5
Build a predictable credit record by using your credits cards on a regular basis, as opposed to just in emergencies. As counterintuitive as this sounds, financial institutions prefer to see reliable patterns of expenditures and payments before increasing a credit line.

Step6
Locate the toll-free number for your Credit Card Company or bank. It's usually located right on the back of your credit card and printed statements. Ask about the procedure for requesting an increase in credit, and ask whether it can be done over the phone or whether you will need to fill out an application.

Step7
Go to the website for your financial institution and download an application for credit increase (if necessary). Fill out the form in as much detail as possible, and forward it to your credit card company.

[mrpaseo]

Here is an idea... Issue yourself a credit card!

Here is how you do it. You put 300 in the bank. This is your credit limit. DO NOT EXCEED THIS LIMIT. Use this money as you see fit, treat it like any other credit card. At the end of the month ensure you pay the balance (You should end up with the 300 in the bank at the end of the month).

When you want a credit limit raise all you have to do is sit down and go over your budget. When you can afford to put more money in yourself issued credit account, then raise your limit. I suggest 500 dollars. Do not go to high to fast as at the end of the month you will not be able to pay this credit card in full.

I know what you’re thinking, how am I going to get to the money? That is a good question; most banks have what is called a Debt card. This card withdrawals the money ON THE SPOT! So you need to ensure you stay within your credit limit.

I would recommend tracking your account daily (5 minutes a day looking at your budget will ELIMINATE any financial induced stress). If you are a once a week or fortnight type of person then you can sign up for what is called "Over draft protection" for yourself issued credit card. If you go over your credit limit there will be a slight fee but you will not experience the embarrassing moment of a card rejection.

Alright, all joking aside, if you save up some money into an account for no particular reason you will have funds for that spontaneous purchase. This is different from your emergency fund, and different from your "I'm buying a car" fund. I usually set aside 50 dollars per month for this fund. I call it my "slush fund". I keep about 300 dollars in the fund (It just sits in my credit union checking account as my "Overdraft protection"). Each month I allot 50 dollars to this fund. If we use it, the 50 dollars goes into the account to replenish the use (No interest paid out to a credit card company). If we do not use the fund during the month, at the end of the month the 50 dollars that is budgeted is recycled into the budget.

You can do this with any amount. Once you establish your budget, your emergency fund and you are debt free. All you have to do is set up your slush fund (Some people call it a blow fund). Get a debit card on this account and use it like a credit card (ONLY UP TO YOUR LIMIT which is the balance that you put into the account). If you use more than your monthly allotment then pay back into this fund as if it's a bill. For instance:

Credit limit (Account balance): $1,000
Monthly allotment (Let's say 10%): $100 (This is the money that you budget for this account)
Let's say you charge $300 dollars
It would take 3 months to make up the money, but what if you charge again next month? To fix this, treat this account like a credit card that you want to pay off ASAP. Once you charge on it, you need to work out an aggressive plan to pay it off ASAP, remember for every day you remove money from this account you are no longer earning interest (Imagine a credit card that paid interest on the balance that you did not use).
I know what you are thinking, “How does this help my FICO score?”. Good question, it doesn’t, well it doesn’t directly. Indirectly it will keep you from going in debt which will keep your loan to debt ratio pretty high. Imagine a life where you do not need a FICO score. A life where you paid cash for everything, a life where the only interest you experience is interest earned.
Think about it,
Ray

[cptacek]

I like it MrPaseo!

[Pitman]

Step 5
Build a predictable credit record by using your credits cards on a regular basis, as opposed to just in emergencies. As counterintuitive as this sounds, financial institutions prefer to see reliable patterns of expenditures and payments before increasing a credit line.

This step pertains to me. I've always told myself, I'll only use my CC if I'm stranded on a desert island, and I wonder why my limit has remained stagnant for so long. But beyond that, I've trained myself to only use my debit card, plus my rents have been preaching to me that CC are the devil since forever. So I guess it stuck.

[Gjowers]

Why do you need a higher limit? Credit cards can get you into real trouble real fast. I probably have an extreme viewpoint on this, but I believe that borrowed money tends to keep the middle class - middle class. I think mortgages are good and so is money borrowed to start a business. However, credit cards and auto loans and the like make it far to easy to live beyond your means and then spend years paying for it - you don't get ahead that way.

[kork13]

Why do you need a higher limit? Credit cards can get you into real trouble real fast. I probably have an extreme viewpoint on this, but I believe that borrowed money tends to keep the middle class - middle class. I think mortgages are good and so is money borrowed to start a business. However, credit cards and auto loans and the like make it far to easy to live beyond your means and then spend years paying for it - you don't get ahead that way.

I think the question is really "Can you handle a higher limit?"... For someone who uses a CC responsibly (pay in full every month, never carrying a balance), there's no problem with getting a higher limit, so long as you can continue to maintain never keeping a balance. People like that can use CC's for convenience and rewards.

However, if you regularly carry a balance, only make partial payments, etc., it would be better to start using a debit card if you're after the convenience of plastic... mrpaseo put up a really good plan for doing that. Debt should be a tool you use, not a ball/chain that you have to drag around your neck.

For people in the first group, a higher limit can be necessary... I use my CC for just about everything, even for a $.59 stack of note cards. It's simpler than cash, and since I pay it off every month, I don't worry about piling up debt. My primary CC has a fairly high limit, which I need, because I put my rent, cell phone, groceries, travel, and all incidentals on it... over $2k/mo. Having a high limit allows me to do that without having a really high debt-to-limit ratio. In the end, it's a matter of how you use the card.