How Often Will a Credit Limit Increase?

Credit limit increases do not happen at specific times for every credit card holder. Some banks decrease credit limits for certain customers, even if the accounts are in good standing. Increases are sometimes predictable if you know the criteria on which lenders base them. You can request an increase, although this affects your credit score, and there is no guarantee you will get a bigger credit line.

Definition

A credit limit increase means that you get more spending power on your credit card. Credit cards are issued on revolving accounts, which means that a bank extends you a certain amount of credit. You may make purchases up to that amount. Your available credit constantly changes, going down as you spend money and up when you make payments. You have a minimum monthly payment requirement, but you can pay more to free up more money on your credit limit, and you can even pay the entire bill each month to keep your whole credit line available.

Automatic Increases

Banks periodically review credit card accounts and increase spending limits for good customers. Increases are not solely based on a good payment record, although that helps. Lenders want to make as much money as possible from their cardholders, which involves getting you to spend more, which generates merchant fees and possible interest charges. You may get an automatic increase every year or two if you keep your balance below the limit or recently paid off your balance, as encouragement to spend more, according to Credit Card Chaser. Your bank may notify you about the increase, or you may simply notice it on your statement.

Requested Increases

You may request a credit limit increase whenever you wish, although your bank can deny it and you hurt your credit score with each request. Asking for more credit usually generates a hard inquiry on your credit reports, meaning that your bank checks your credit bureau records to see how well you handle all of your accounts. Hard inquiries lower your credit score by up to five points. Be prepared to give a reason for your request, such as transferring a balance from another credit card. Paying on time and being a long-term customer increase your chances of success.

Considerations

High credit lines are good for your credit score as long as you do not use all of your available credit. The balances of all your revolving accounts should never exceed 30 percent of the available money, and you get the best credit score for keeping it below 10 percent, according to MSN Money writer Liz Pulliam Weston. Your credit use percentages make up almost a third of your credit score, so high but unused limits are very helpful.