How often can/should I apply for a credit limit increase?

Question

I just got my first personal credit card 8 months ago, and I'm occasionally hitting/getting close to the credit limit. I've never missed a payment or had to pay a single fee, and I'm using the card for everything.

I tried to get my credit limit boosted two months ago and it was boosted a couple hundred bucks, but it barely solves the problem; I still have to manually pay off my balance instead of waiting for my automatic, monthly payments. This was the only time I requested a limit raise (and it was successful, but not for the amount I requested).

I want to get my limit boosted as soon as possible, but how often should I request a boost? Will it negatively impact my ability to raise my limit if I request a limit raise too soon after my last request?

My current limit is low. My typical utilization is ~50% or more at statement time which I know is high and could affect my credit rating. Sometimes I've had to manually pay my statement, and this month I had a charge declined because I hit the ceiling for the first time (neglected to check my limit before a large purchase).

My credit card is my only "debt", student loans paid off, I own my car outright. Renting house, no mortgage.

Answer 1

While f1StudentInUs is correct in all aspects, I would also suggest you get more than one line, rather than increase a single one. Apply for a card a year after your first. I keep three cards, but I can't honestly argue that it is important to have three.

The reason is simple: should you lose your only card, then you are left without credit; if you lose one of the two, you still have that payment option available.

While living off of cash is the wisest, if you can, having the option of credit for online purchases and other situations where a credit card offers advantages over cash is pretty smart.

However, now that you have a card and a line of credit, don't feel compelled to use it for everything. Put a few recurring payments on there and go back to cash. This will keep your utilization low and not create dangerous habits.

Answer 2

Utilization over 20% hurts your score. It's pretty crazy, because for new card holders you are dinged for going over $200 when the cycle ends. I suggest paying all balance over the 20% before the bill is cut. This will help the score.

Edit - My Article "Too Little Debt?" discusses the impact of too high utilization as well as the zero percent use case.

Answer 3

Seeking credit, that too often is Not A Good Thing in eyes of lenders. If you are leaving a trail of hard queries, you are affecting your score negatively.

Actively asking for credit line increases is usually a hard query.

You say you got your first personal credit card 8 months ago: so did I, but that was in the US. I had been managing my cards for years back in India: using cards responsibly takes practice and discipline, otherwise it's a very bad drive down the steep hill.

Questions:

1. What are your credit limits right now
2. Have you been hitting your limits in the statement balances (gives me an idea about your utilization)
3. What's your income-debt ratio like (lenders look at this besides your score)
4. Most importantly: if your limit is above a few thousand dollars, why are you hitting the limit so much?

The quick answer to your question is: you should not be asking for new credit lines more often than a year apart.

The responsible answer is there are no quick answers when debt is involved.

For example, even if a lender gives you an increase this month, their risk management systems can close you card the next. AmEx is well known for this behavior.

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Update after OP's own:

1. Do take MrChrister's recommendation: people tend to hold different views regarding holding multiple credit cards on this forum, but almost all agree having at least 2 cards is a good idea.

   I guess this is basic risk management from your side.

   Now here's the caveat: Assuming you have been actively seeking credit, the CRAs have been notified via hard inquiries: this means all lenders can see that in your report.

   This means you are likely to be turned down for new cards.

   However, here's a tip: apply anyways! If they turn you down, secure your new card with good old cash. This costs you money but you get a new line.

   Read here: Better ask for secured credit card rightaway or risk asking for an unsecured credit card first, the secured credit card later if it does'nt work out?

   For more details about multiple cards, do read these:

   What proactive measures can be taken before or when a lender closes your credit card?

   Is it a bad idea to have 3 secured credit card accounts open?

2. If you cannot put in the cash, I recommend you optimize your score on the $1300 card by keeping your utilization ratio around 9%. This is based off JoeTaxpayer research where he put his own credit on the line to find out the answer!

   N.B., I don't know what your financial situation is: however, if you can afford to pay your card off in full by statement date, I am sure you can come up with the secure deposit.

   If that could be difficult, at the very least, pay off your balance before your statement generation date (instead of paying on the due date)

   See here:

   How bad would maxing out my credit card once a year affect my score

   Paying off all your credit cards but one before statement generation date : helpful?

3. If none of the above seems like a doable idea for you, here is one insight Dr. Dilip V. Sarwate from the University of Illinois at Urbana-Champaign shared here: Maximising total credit limit on credit cards

   I quote:

   In the US, at least, if you charge a lot e.g. up to close to your credit limit, for two or three months in a row and pay it off in full each month, your credt card company will raise your credit limit all by itself to prevent you from accepting an offer from a competing credit card company and taking your business away from them. – Dilip Sarwate Mar 17 at 12:37

   Although I have not tried this myself, nor seen any articles to this effect, this is an extremely smart person not likely to joke around.

   Since you have a $1300 limit, it should not be difficult for you to try this out!

   There is always a risk of the opposite happening and your current card being booted but if you are interested in going this route, I could ask Dr. Sarwate for more details.

   You are in good company: People on this forum are passionate about sharing knowledge: all I know are from people who answered this very question!

Answer 4

Ask the credit card company for what you want. If you need a 2k limit and have a history of complete payoffs regularly then I doubt this will be a problem. If you are wanting a 5k limit they will probably want a longer history. They just got a report so they should not need to pull a new one. When talking to someone on the phone do not just accept we will review your account. Ask to talk with someone who can make the change. If they say no one can ask to talk with a manager. I would be very surprised if the company you are dealing with did not have someone that could resolve situations like this. And at least help you determine what you would need to do to get the limit that you need.

You should have an idea of your budget and be able to send 25% of your monthly charges as a weekly payment. Do that. It will help keep your overall utilization down while being able to utilize your card the way you like.

But the bottom line is talk with the company. Be friendly and let them know you are interested in using their service. Realize you are asking them to trust you. But do not beg. The CSR talks with people who are unfriendly and want something for nothing all day long. Someone treating them nicely and asking for their help is a great change of pace.

Answer 5

Have you given any thought to just getting rid of the credit card? It doesn't seem like you need one based on the other things you noted (student loans paid off, I own my car outright. Renting house, no mortgage).