How credit limits work

A credit limit is the maximum amount that can be charged on a revolving account. But how is that limit decided, and what can you do to increase it? Read on to find out.

Credit card limits depend on a bank or issuer’s policies and other factors, including an individual’s credit scores. In general, people with higher credit scores will qualify for higher credit limits. Those with lower credit scores will qualify for lower credit limits.

Some banks or card issuers allow you to spend more than the credit limit. However, you may be charged an over-the-limit fee, so make sure you’ve checked your card’s terms and conditions before you even consider going over your limit. Usually, it’s not a good idea.

How to increase your credit limit

The easiest way to increase your credit limit is to call the card issuer directly. You may also have the ability to make the request via your online account. This will depend on the bank or issuer. You will likely have to wait until the account is at least six months old.

Note that asking for an increase may affect your credit score. If the card company runs a credit check, a hard inquiry will appear on your credit report. (Hard inquiries usually occur when you ask or apply for something, like a credit increase or loan.)  If they run a soft inquiry or don’t run a credit check, your score will not be impacted. 

If you’re denied a credit limit increase, you can try again in a few months. 

In addition, sometimes, credit card companies will automatically increase your credit without you asking.