Have you ever felt the feeling that you need to buy something but you are unable to because you have exceeded your card's limit?
I think everyone had already experienced that kind of situation. Well, credit cards limits are there to regulate our spending which is better given that some of us have no regrets about overspending our credit cards. But, do you know that you can increase your credit card limit if in case you need to buy something important?
Really?! Yes! Absolutely!
All credit cards come out with a certain limit. However, you can increase this limit by just calling your bank and asking to increase your limit to a certain amount. They will ask for a pay stub or proof of income to know that you are eligible for the increase. They will also do some credit checks to further know that you are indeed qualified for a credit limit increase.
The increase to your credit card limit is permanent. It means that you cannot turn back your credit card limit to the way it was before. So you better make sure that you are doing the right thing before you decide to increase your credit card limit permanently. However, the bank has the right to reserve your request if they found out that you are deemed unqualified for the increase. Some of the reasons for being not qualified are having a low income, low card utilization, or low credit score. They can also deny your request if they found out that you have not been using your card enough to justify the said increase. You will receive a letter from them stating the reason why your request was denied.
However, the question is, can the increase in your card's limit, improve or harm your credit score?
The answer? Is BOTH.
The increase in your credit card limit can improve your credit score and decrease your credit utilization. However, it can also harm your credit if the bank decided to make a hard inquiry on your credit report. Once the bank decided to make a hard inquiry on your credit report, it will stay on your report for two years making it hard to purchase a loan or mortgage if you are going to apply for it since making a hard inquiry could greatly decrease your credit score and increase the interest rate.
On the other hand, if your bank decided not to make a hard inquiry, rather a soft one, they may give you a reminder every 6 months to call and ask for a credit card increase thus, making you eligible for the said increase.
Increasing your credit card limit is, honestly, very risky. It can improve your credit score however, it can also affect your credit report. The best thing that you can do is to stay on top of your budget and only ask for an increase if it is necessary.