Why Does My Credit Card Issuer Keep Increasing My Credit Limit? - NerdWallet (2024)

FAQs

Why Does My Credit Card Issuer Keep Increasing My Credit Limit? - NerdWallet? ›

If you handle your credit card in a responsible manner over time, your card issuer may automatically boost your credit limit at periodic intervals. Certain actions could make you more likely to see an automatic credit limit increase, such as reporting an increase in your income or improving your credit score.

Credit card issuers may be more likely to raise your limit if your financial circ*mstances have recently changed for the better, such as if your credit scores have increased or if your income has increased.

The second way you may get a credit limit increase is if a credit card company increases your limit without a request from you. This typically occurs after you've demonstrated responsible credit habits such as making on-time payments and paying more than the minimum payment required.

This may happen because you are considered a responsible customer. It can also happen if you report an increase in income. In some cases, credit card issuers have a built-in path for customers that eventually leads to a higher credit limit after being a customer for a while.

As a reward, the credit card issuer may automatically grant you a higher credit limit, or invite you to request one. It could be just a small bump, or it may be as much as 30%. The news may come to you out of nowhere, but it's no reason to be concerned. In fact, it's a sign you're managing your credit card well.

In the long term, a credit limit increase may improve your credit scores, provided you make regular, on-time payments. In the short term, however, asking for a credit limit increase may temporarily decrease your scores.

Lenders generally require a credit card to be open at least six months before considering a credit limit increase.

When credit card companies have evidence that you have consistently handled your current spending limit responsibly, they may increase your limit without you even having to ask. This typically happens after 6 to 12 consecutive months of on-time bill payments.

If your request is denied and it involves a hard inquiry, it may not be a good idea to ask again too soon. That's because too many hard inquiries in a short period of time may have a larger negative impact on your scores. The Consumer Financial Protection Bureau (CFPB) recommends only applying for the credit you need.

By request: You can request a credit limit increase every six months. No guarantee: Credit limit increases are never guaranteed, but you can improve your chances with responsible card use and a history of on-time payments.

Why did my credit limit increase automatically discover? ›

You may qualify for a credit line increase automatically if you've been paying on time, keeping your credit utilization low, and have a good credit history.

If you like your current card, asking for an increase could be the right move. But if you're looking for additional rewards or a better rate, opening a new line of credit may be the right option. No matter what you choose, always remember to use credit responsibly and spend within your means.

The average credit limit on credit cards in the U.S. was $29,855 as of the end of the third quarter (Q3) of 2023. That's a 6.8% increase from Q3 2022, when the average credit limit was $27,955.

When your credit line is slashed, you're a lot more likely to go over your maximum credit limit. Therefore, you should call your credit issuer and ask for them to reconsider, argues Tayne. “A good first move is to contact the creditor to see if the old limit can be restored,” she advises.

If the credit increase is not automatic and you actively request it, expect your lender to conduct a hard credit inquiry. While this could temporarily lower your score by a few points, likely no more than 10, the effect is generally short-lived.

Requesting a low limit may inhibit spending, and may require you to use a larger portion of the credit available to you. Using most, or all of the available credit may negatively impact your credit score as it can indicate that you are financially stretched, even if your limit is quite low.

If you request a credit limit increase and your credit card issuer uses a hard inquiry to review your credit, it could temporarily lower your credit scores. If an issuer proactively raises a cardholder's credit limit, it may involve a soft inquiry, which doesn't affect credit scores.

Increasing a credit card limit lowers your credit utilization ratio, which boosts your credit score. It can be a better choice than taking out a new credit card, which shortens your credit history and decreases your credit score.