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My Credit Card Limit Increase Was Denied. What’s Now?

If your card issuer does not grant an automatic credit limit increase, you may initiate a request for a credit limit raise. The unfortunate truth is, not all requests get a nod – a good number of them get a thumbs down from the issuer.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

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Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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It’s easy to think of a reason why a cardholder would want to seek a higher credit limit.  Of course, a higher limit means more capability to make larger purchases.  It can even push your credit score upward and therefore set you up to qualify for better loan terms and credit card opportunities in the future.

If your card issuer does not grant an automatic credit limit increase, you may initiate a request for a credit limit raise.  Your credit card company will process your request by considering your account history, income, and credit history to decide whether it’s okay to give you more credit. 

The unfortunate truth is, not all requests get a nod – a good number of them get a thumbs down from the issuer.

Key Takeaways

  • There are several reasons the financial institution might deny a credit limit increase. Those reasons include being late on payments during the last 12 months or having large balances on other credit cards.
  • It’s helpful to keep in mind that some companies have a policy of requiring the account to be open for at least 6 to 12 months, before increasing the credit card limit. Therefore, sometimes the best approach might be to just wait before this period expires.
  • One of the common reasons for denying a credit limit increase is poor credit scores. So by improving your credit score, it will become more likely that the bank eventually agrees to increase your credit card limit.
  • Another way to improve the chances of a credit limit increase is to get additional sources of income or increase the size of your primary income. In this way, the bank might be more willing to approve the credit limit increase.

When Should You Not Ask For a Credit Limit Increase?

Your personal situation affects whether you will be approved for a credit card increase or not. Try not to apply for a credit limit increase if your credit score is only in the fair or poor range. If you have recently had late payments and high credit utilization, you might also be denied a credit limit increase.

The company will also check if you have recently applied for credit limits with other companies, so don’t apply for too many at one time. If you have recently taken a lower-paying job, you might also not be able to get the credit limit increase you’re hoping for.

Try not to take a credit limit increase if you’re about to take a vacation or do something else that could make you more susceptible to spending more money. The credit limit increase might encourage you to spend more money than you have.

rejected credit card application
New account, recent applications, low score, low income or late payments are just some of the reasons for rejected credit card application (Photo by Cast Of Thousands/Shutterstock)

Why My Credit Limit Increase Was Denied?

Being denied a credit limit increase can be frustrating but knowing the reasons why might help you to get the increase in the future. If you have been late making payments on the credit card within the past 12 months, you will probably be denied a credit limit increase. High balances on other cards in ratio to the limit might also cause a company to deny you an increase.

If you have recently applied for a credit limit increase on another card or your account is less than a year old, the credit card company might consider you a risky buyer and not allow you to have higher credit.

Most companies want to see that you have high enough money to take on a credit card increase and be able to pay the extra money back on time. Having a low income might be a reason some companies will deny you an increase.

There are a couple of reasons why issuers decline credit limit increase requests:

Many credit card issuers have an internal policy that precludes them from issuing a credit limit increase unless the account has been in existence for a minimum of six to twelve months.  You may find some credit card companies that have a longer requirement.

If you’ve just opened your credit card account, it’s good to wait for at least six months before you request for a credit limit increase to get a better chance of getting an approval.

If you have recent applications for any kind of credit (not just credit cards), that may hurt your chances of getting a credit limit increase.  This is the general case regardless if lenders have approved those applications or not.

Recent multiple applications give the lenders the impression that you are in some kind of financial trouble and is in desperate need of a loan to bail yourself out.

Credit rises and falls on the credit score.  It could be the most significant singular factor that would influence a lender to decide quickly to grant a credit limit increase.

If you have a low credit score, the lender might conclude that you have other credit problems that make you a risky account and therefore not worthy to receive more credit.  Normally, your credit card issuer will send you a free copy of your credit score because they used it to decide not to give you a credit limit increase.

According to Experian data, the average credit score for United States residents was 714 across all age groups. In the table below you can see a breakdown per age:

 

If you already have a lot of available credits and several open credit cards in your wallet, you are a credit risk because you could get into debt very fast.

 Most credit card issuers don’t want their borrowers to be overwhelmed with debts.  It’s not because they sincerely care about you personally, but because when you can’t manage your debts, you may default on your credit card payments.  Increasing your credit limit contributes to increasing that risk.

The lenders assign your credit limit in relation to your monthly income.  Therefore, if they perceive that your income is too low (using their own metrics), it will be unlikely for them to approve your request for an increase.

Late payments tell your lender that you’re having trouble managing your credit.  Since credit card issuers will naturally check your credit report before they decide on your credit limit increase request, late payments to any credit card or loan can drastically reduce your chances for approval.

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What Can I Do Now?

When your card issuer denies your request for a credit limit increase, all is not lost – you have several options available.  A good jumping board is to check the notice of denial and do some corrective measures to address the issues they have noted.

This may mean finding a way to pay off some existing debt or making sure you pay your bills on time.  Only after you’ve shown your creditors that you are responsibly managing your credit can you reapply for the credit limit increase.

A majority of Americans have a plan to reduce their personal debts within specific timelines, based on a poll conducted by Northwestern Mutual

 

For The Short Run: Consider Applying Another Card

One thing you could try is to apply for a different card that has a higher limit.  But, make sure that you stand a big chance for approval.  If you apply for the card and the issuer turns you down, your credit score is going to suffer because of the issuer’s additional hard inquiry.

If your credit is really the issue, a secured credit card could be a great option.  These cards are great for people who want to improve their present poor credit to something respectable over time (Check out Capital One Secured Mastercard or Discover It Secured).  

The lenders give a credit limit under $1,000 and would require you to put down a refundable deposit when you sign up.  This lessens the risk that the card issuer undertakes because you are practically borrowing your own money.  They will send your monthly payment history to the credit bureaus so, using your card responsibly can make giant steps toward repairing your credit.

You should do this as a last resort.  These cards are notorious for their annual fees and high-interest rates that could damage your finances even more in case you lag behind on your monthly payments.

For The Long Run

For the long run, there are structural changes you may want to do. Consider a financial plan that include:

Lenders won’t usually deny your request for a credit increase if you have sufficient bank balance to justify that you’re worth the risk of receiving more credit.  Show them that you’re seriously managing your credit by reducing your overall spending.

If this isn’t the best way to push your credit score up, it’s one of the great ways to increase your credit limit.  By doing this, your credit card issuer will see that you are a responsible credit card holder and that you use cash to pay off your card balance every cycle.

The most common reason why lenders deny a credit limit increase is they perceive that the borrower will become a bigger risk to the bank.  It could be because your credit utilization ratio is leaning too far.  This ratio shows how much of your available credit you have already used up.  Or it could be your inconsistency with your payments.

If such was the case, a sensible creditor wouldn’t invest more money in you.  It’s strictly business from their end, it’s nothing personal.  The burden of proving you are a responsible and trustworthy borrower rests on you.

Begin using your card more and more often.  Although it might be a hassle, you should even pay your household expenses through your credit card.  Just be sure to pay your bills on time so that you can establish that you are a profitable cardholder for your credit card issuer. 

If you think you’re handling your cards and other credits excellently but still received rejection notices for the increase, the lenders may have some other reasons.  Go through these questions as you look into your credit report:

  • Does it report some late bills or other negative marks? If they do, are they correct?
  • Are there any activities or transactions that you did not authorize or appear to be fraudulent?
  • What is your current outstanding debt to income ratio?

If you see anything out of order on your report, start to fix the discrepancies by writing to the credit bureau immediately and tell them what you think is wrong – and why it is so.

If paying your debt comfortably is already becoming a challenge, you need to increase your income.  There are a lot of opportunities out there if you search for them.  Look into different options, be creative and resourceful.

You can take on a roommate, drive for Uber or Lyft, list your space on Airbnb, do some dog sitting through Rover.com, or deliver groceries via Instacart.  These are easy ways to make some cash without compromising your full-time job or commitments.

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When To Ask For Another Increase?

Even though your last request was denied, there is a good chance of approval in some cases:

If you have a good credit score, it’s like saying to your issuer that you’re a responsible borrower.  Therefore, they can trust you to make your payments on time and be prudent in your use of the card. 

Although good credit does not necessarily mean good financial health, creditors often look at them as related.  It’s a good goal to have both.

This is one of the best ways to amplify your credit score and one of the sure ways to get a credit limit increase.  Your lender will see that you have been using your card with care and paying off your balance with cash for each statement period.  Take a conservative approach when you request for a credit limit.  Your issuer will decide based on your credit and how much increase you are requesting.

Don’t shoot for the moon and ask them to double your credit limit – better aim between a 10%-25% increase.  Here’s the catch:  if you ask for too much and then the issuer declines, you may need to wait for at least two or three months before you can ask again.

An increase in your credit limit can be beneficial after you’ve started earning more because your finances need to be more flexible.  Let’s say you shell out $500 on average every month on a credit card with a $1,000 limit. 

Your credit utilization ratio will register at 50%, which is above the benchmark of 30%.  If your limit climbs to $5,000 and you’re still spending $500 a month, your utilization will go down to 10%.  This is excellent for your credit.

FAQs

Each credit increase application might be a little different, but in general, you will need your current income papers such as pay stubs. You will also need your employment status ready and the payments you make each month such as for housing or auto loans.

You will also need to provide your social security number and some other personal information. This will allow the company to pull your credit report and other documents they may need to see if they can approve or not.

You should only ask for a credit limit increase when you really need it. Requesting too many credit limit increases can impact your credit score negatively and then you might not be eligible for a credit limit increase when you actually need it.

Try to request the credit limit when you have a good or excellent credit score. This will make your approval chances much higher. Asking for an increase while you have no late payments and cards that are not maxed out will also make it more likely to get approved.

This depends on if the credit card company does a hard inquiry as part of the application process. If they do a hard inquiry and then your application gets denied, you will see a drop in your credit score.

If they only do a soft pull, your credit should not be impacted. Being declined with a soft pull also does not have a negative impact on credit score. If a credit card company sees that you have had many credit limit increase requests on your report and then denies you after a hard pull, this could also decrease your credit score by a few points.

If you have high credit utilization, requesting a credit limit increase can have a positive impact on your credit score. By lowering the overall utilization, you can have a higher credit score. If you have a big purchase coming up and want to be able to use the credit card, asking for a credit limit increase gives you a way to make the purchase without having to upfront the money.

Increasing your credit limit also gives you more funds to spend and receive more cash backs and more rewards.

Asking for a credit card increase is not bad. In fact, sometimes a credit card company might even invite you to apply for a credit increase. Not all requests will be approved though. It might even be a good idea to request a credit increase before you actually need it that way you don’t have to stress about not being approved or being approved too late.

Getting a credit card limit increase can give you more spending money and also lower your credit utilization. The latter could help your credit score.

Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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