Credit card companies don’t usually ask your permission to increase your credit limit. Instead, you’ll get an email, letter in the mail or an alert the next time you log into your account stating your limit is going up. This often comes as a reward for your months or years of healthy credit behavior (like paying your card on time and not maxing it out). However, the real reason credit card companies want to increase your credit limit is to try to lure you into overspending, which of course means you won’t be making those payments in full anymore and will then start owing interest. So why would anyone choose to request a credit limit increase? There is one good reason.
Why increase your credit limit?
The best reason to increase you credit limit is so you can lower your credit utilization ratio and improve your credit score. This only works if you don’t increase your spending habits to match your credit limit increase. Remember, you don’t want to spend more than 30% of your total available credit limit. So, maybe you’re still fairly new to credit and your first credit card has a $1,000 credit limit. You probably spend more than $300 a month for regular expenses, so requesting a credit limit increase would be helpful. You wouldn’t change your spending habits, but it would allow you to put more on your credit card without having high utilization.
Another reason to ask for a credit limit increase is to help you cover a planned expense, like purchasing a washing machine for your home, that would otherwise put you near your credit limit.
Lower utilization correlates to a higher credit score
Utilization is the second largest factor that’s used in determining your credit score. First is payment history at 35% and then utilization at 30%. That means 65% of your score is determined by just two of the five total factors – the other three being: diversity of credit, length of credit history and new credit.
The lower your utilization, the better it looks. Even though credit card companies may be trying to lure you into overspending, other lenders don’t want to see that you always max out every line of credit extended to you. This is why it’s important to try to keep your utilization ratio (the amount of credit you actually use compared to the amount available) at 30% or less. Yes, that means utilization counts for 30% of your credit score and you should keep your utilization ratio at 30% or less.
What makes a bank decide to increase your credit limit?
You can’t just magically increase your limit without the approval of your credit card company. The bank will take some time to check your past use of existing credit, see if you still have a clean credit report and ask for your annual income. Sometimes the bank does check this information proactively (minus asking for your annual income) and decides to just increase your limit on its own. If that hasn’t happened, here’s how you can request a credit limit with a Barclaycard.
How to request a credit limit increase from Barclaycard
Most credit card companies allow you to request a credit limit increase online, such as American Express (Chase does require a phone call). This article will overview how to request a credit limit increase from Barclays in just a few simple steps after you login to your account at BarclaycardUS.com.
After you’ve logged in, click on “Services”.
Next, click on “Request credit line increase” within the pop-up menu.
Once the new page loads, select “Request a credit line increase” from the menu.
You’ll be taken to a page where you need to fill in your information to request a credit line increase. You’ll have to enter the additional credit you desire along with information about your occupation, employer, employment history, and income. You’ll also have to verify your phone number at the bottom before submitting your request. Verifying your phone number gives Barclaycard permission to contact you via phone at the number you verified.
If you’re not tech savvy, you can also request a credit limit increase by calling Barclaycard’s customer service at 1-866-603-7217.
- Don’t spend more than 30% of your total available (new) credit limit.
- You won’t be able to increase it again for 3 months or 6 months if you asked for a credit limit decrease.
- You can try again in a month if you were rejected for a requested limit.
Your credit limit was increased. Now what?
Now that your limit was successfully increased it’s more important than ever to be diligent about your spending. Keep that that utilization ratio at 30% or less and always pay your card on time and in full.