Having access to credit can allow you to have more flexibility regarding purchases and cash advances. If you are looking to increase your credit card limit, you should know what steps to take. Here’s a look at how you can increase your chances of having your credit card limit increased in Canada.
Figure out how much of an increase you want
It’s a good idea to try to figure out how much of an increase that you want. If you have a firm number in mind, this may make it easier for the credit card company to approve your credit card limit increase request.
How to discover the right amount?
You want to make sure that your credit card limit increase is something that you can handle. Therefore, you should make sure that your credit card limits are no more than 10% of your annual income. This will help you manage your minimum monthly payments.
Make sure you are well prepared before you make your request
You want to make a great argument that the credit card company should give you a raise in your credit limit. Therefore, you should make sure that all of your information is in order. Here’s a look at a couple of steps that you should take.
Check your credit score
The first thing that you will want to do is check your credit score. When you request to have your credit card limit raised, the credit card issuer is likely to check your credit score to see if you have a history of paying your bills. In Canada, there are two major credit reporting agencies that credit card issuers will use:
You are entitled to a copy of your credit report from each credit reporting agency once per year. Get a free copy of your credit report to ensure that you have a suitable score for a credit card limit increase.
Make sure your income is up to date
When you applied for your credit card, you had to report your income. Since you applied for your credit card, you may have experienced an increase in your income. Be sure to contact your credit card issuer and update your current income. A higher-income may increase your chance of success.
Reduce your credit utilization
Another thing that your credit card issuer will check is your credit card utilization. If you keep a high balance, then the credit card issuer may believe that you will not handle a credit card increase. Lower your credit card balance to no more than 30% of your available credit.
Making a request for your credit increase
Once you have done all of your prep work, it is time to request your credit card limit increase. You can request your increase by contacting the customer service center. At that point, you will want to specify how much you would like your credit card limit to be. Usually, you will be able to receive an instant decision.
Mention how long you have been a customer
If you have been a customer for a long period of time, then it is a good idea to mention that on your follow-up call. Credit card issuers may be more likely to increase a credit card limit to someone who has been loyal for years.
Show your strong payment history
If you have a strong payment history with your credit card, then it is a good idea to point that out. Sometimes, you may be denied because of a poor payment history with other bills. However, a credit card issuer may grant an increase if you have never missed a payment with them.
Threaten to close your account if you are not approved for the limit increase
One of the best ways to get a credit card company to listen to you is to threaten to close your account. In many cases, the customer service representative will put you on hold and transfer you to a more senior person at the company. That person is in charge of retaining customers. Therefore, you may have the more senior person give you the rate increase you want.
After you get your credit card limit increase
If you prepare properly, then you should be able to get your credit card limit increased. However, you are not completely done yet. Now that you have a new credit card limit, you will want to make sure you use it the right way.
Watch your credit card utilization
Even though you have a higher limit, you will want to make sure that you still do not exceed 30% credit card utilization. This will give you a better chance of servicing the debt, avoid higher interest rates and keep your credit score at a good level.
Waiting at least four months before asking for another credit limit increase
If you would like another credit card increase, then be sure to wait at least four months. Most credit card companies will give you another limit increase at least four months after the last increase.
Avoid hard inquiries on your credit report for at least six months
Anytime you request a credit card limit increase, a credit card company will perform a hard inquiry on your credit report. Several hard inquiries, in a short period of time, can lower your credit score. Therefore, wait at least six months before applying for another credit card or applying for a loan.
Giving your credit card limit a big boost
A credit card limit increase can go a long way in giving you the flexibility that you need when it comes to spending on your vacations, business meals or when it comes to major purchases. Be sure to check your credit score, lower your credit utilization and know how much of an increase you’d like. Taking the right steps can help you get the high credit card limit you have been looking for.