When is a good time to ask for a credit limit increase? Some times are better than others to ask for a raise in your credit line. First and foremost, ask yourself why a credit limit increase is important to you. Do you need to make a bigger purchase in the future? Or are you just looking to have more to spend? If you answered yes to the first question and no to the second, read on about the right and wrong times to ask for a credit limit increase.
Good time: When your credit is strong
Anytime you ask for any line of credit, or increase in your limit, the credit issuer is going to pull your credit history, and anytime your credit report is pulled up in what is known as a "hard pull," it can drag your credit score down by a few points, for as much as a year. If your credit score is really strong, it can be a good time to ask for an increase.
Bad time: When you've been late on bills
If you have been late on paying your bills, even by just a day or two, it's not a good time to ask for a credit limit increase. You will be viewed as a risky bet who may be headed for financial trouble and not a good candidate for an increase.
Good time: When you get a raise
If you've landed a great new job, or better yet, a raise or promotion at your existing company, it might not be a bad time to request a credit limit increase since your debt-to-credit ratio may be lower. Unlike the old days, you may need to provide proof of your increased income. Give the bank a call and ask what they might be looking for before authorizing them to do a hard pull of your credit score.
Bad time: Right after opening other lines of credit
If you've recently opened new lines of credit, or have increased others, including auto loans or even financing at an appliance store or dentist, you've increased your debt load. Even if you haven't spent much of the new line of credit, creditors will see these new, higher limits as your potential debt, which they will measure against what you make, how much debt you already have, and other factors such as payment history. Play it cool for a while and keep up with making timely, not almost timely, payments.
Bad time: When you're traveling
When you are traveling, not only might you be tempted to spend more than usual, but creditors may also see that you are more open to fraud or theft. If you call your credit card company asking for a raise while you are traveling and have lots of new charges made far away from home, it's probably not a good time to ask for an increase.
Good time: When you don't really need it
Yes, the bottom line is that credit card companies are more likely to give you an increase to your credit line when it is least important to you. Why? Because that is when you are at the lowest risk of defaulting on your bills. When you're taking care of your credit, your credit score improves, as well as your perceived ability to pay it back. Be smart and spend less, save more, and you won't even be thinking about the offers of increased credit limits that will show up in your mailbox.
Shirley Pulawski is a freelance journalist who frequently contributes to MyBankTracker.com.