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A guide to increasing your credit card limit

A guide to increasing your credit card limit

There can be both pros and cons to increasing your credit limit – use our guide to understand what you will need to consider beforehand and how to increase your limit.

Anelda Knoesen
From the Money team
minute read
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Posted 8 JANUARY 2020

What is a credit limit?

A credit limit is the maximum outstanding balance that you can spend on your credit card, and is decided by your credit card provider. If you exceed this limit you’ll probably be charged a fee which will be recorded on your credit file and have to pay a higher interest rate.

Why does my credit limit matter?

Your credit limit is important as on your credit report, your credit limit shows how much credit has already been extended to you.  This provides insight to other lenders so that they can better assess your level of existing debt and avoid putting you at risk, by offering the wrong credit product.

By increasing your limit, you can improve your utilisation ratio, which can improve your credit score although this should be taken with caution. Your utilisation ratio is the percentage of credit you’ve spent against your overall credit limit – you should aim to use only 25% of the credit available to you, where possible.

Using only a portion of the credit available to you shows a lender that you’re a responsible credit user. For example, if you have a credit card with a limit of £4,000 and you’ve only spent £1,000, you have an utilisation ratio of 25%.

Increasing your credit limit shouldn’t encourage you to spend beyond your means. If you increase your limit, then spend more on your card and max out the credit available to you again, this will lower your utilisation ratio and negatively impact your credit score – even if you’re keeping up with your monthly repayments. If you don’t think you’ll be responsible with your new credit, it’s best not to increase your credit card limit.

What do I need to consider before increasing my credit limit?

Before you apply for a credit card limit increase, there are a few things that you need to consider:

  • Assess your affordability if you increase your credit card limit: You’ll need to make sure that you can afford to pay back what you owe and keep up with your minimum repayments.
  • Your overall debt exposure: You’re only entitled to a certain amount of credit, based on your credit file, increasing your limit on one card could reduce your ability to apply for another credit card, so you’ll need to bear this in mind.
  • The last time you increased your limit: Lenders may only allow a credit limit increase within a certain time frame – so it’s not always in the full control of consumers to increase whenever they want.
  • Impact on your credit profile: Before applying for more credit, it’s important to get an understanding of whether it will impact your score.

What are my options?

It’s important to consider all of your options before increasing the limit on your credit card. If you’re happy with your existing deal, it’s worth speaking to your provider. They’ll be able to tell you the likelihood of you being accepted for a credit limit increase or give you an alternative, such as a personal loan.

If your main aim is to improve your credit utilisation ratio, you could do this by applying for another credit card that better suits your needs. Other credit cards can have a sign up bonus and you could benefit from cashback and reward cards. You can also transfer your existing credit balance to a credit card with a higher credit limit with better interest rates.  

How do I increase my credit limit on my existing card?

To increase your credit limit you can either wait for an automatic increase or request one.

  • Increase your credit automatically

Many credit card providers will increase your credit automatically if you’ve shown that you can manage your credit effectively - by keeping up with your monthly repayments and using your credit.

If you’ve shown that you’re a responsible credit card user, you could be offered a higher credit limit as frequently as every six months. An automatic credit increase will not appear on your credit file and therefore won’t impact your credit score. You’ll be able to see it but other lenders won’t. An automatic credit limit doesn’t require your permission but you’ll have 30 days to reject the credit limit increase.

  • Request an increase

You can also contact your provider to request a credit limit increase. A requested credit increase will show on your credit file and lenders will be able to see. Your provider will either agree to your credit limit request, decline it or present a counter offer with a lesser increase.

You can request an increase either over the phone or via online banking. If you’re making a request online, you’ll need to sign into your credit card account or via your mobile banking app, although this will vary from provider to provider.

What information do I need to request a credit limit increase?

If you’re requesting an increase to your credit card limit, your lender will typically ask for your:

  • UK address history
  • National Insurance number
  • Employment status
  • Annual gross income
  • Requested credit limit

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Instead of increasing your credit limit on your current credit card, you might find it better to increase your overall credit by applying for another card. Use our quick and easy comparison service to find a card that suits your needs.

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