Possible Reasons Your Credit Limit Increase Was Denied
A bigger credit limit gives you more purchasing power, helps your credit utilization, can help improve your credit score, and can even help you qualify for credit cards with bigger limits. In the absence of an automatic credit limit increase from your credit card issuer, you may request a credit limit increase. Your credit card issuer will consider your account history, income, and credit history to decide whether to raise your credit limit. Unfortunately, credit limit increase requests are sometimes denied.
Here Are Some Reasons Why You May Have Been Denied
You’ve been late on your credit card or another credit card within the past 12 months. Late payments indicate that you may have trouble managing your current credit obligations. Since your card issuer may check your credit report to approve your credit limit increase, late payments to any other credit card can also lead to your credit limit increase being denied.
Your balance on this or other credit cards is high relative to the credit limit. High credit card balances may mean you’re already overextended. Credit card issuers will be hesitant to grant you more credit if it looks like you already have enough credit card debt.
You’ve opened too many accounts within the past one or two years. What counts as “too many” will vary from one credit card issuer to the next. It may be five, or it may be ten. If you’ve opened several credit cards in the past two years, don’t be surprised if a credit limit increase request is turned down.
You have too much available credit or too many credit cards. If you have several credit cards or a lot of available credit already, you have a high risk of getting into debt. The credit card issuer doesn't want to see you get into debt. Not because they care about you personally, but because it increases the risk that you'll default on your credit card payments and a credit limit increase would only increase the risk.
You’ve made too many recent applications for credit. Recent applications for credit can hurt your chances of getting a new credit limit increase, even if you weren’t approved or if you eventually turned down the credit card. Too many recent applications can indicate that you’re taking on too much credit or that you’re in some type of financial trouble that you need to fix with credit.
Your account is too new. Many credit card issuers require that your account be open between six to twelve months before you can be considered for a credit limit increase. It may be longer for some credit card issuers. If your account was recently opened, wait at least six months before requesting a credit limit increase for the best chance at getting approved.
You don’t have enough income for a credit limit increase. Your credit limit is often related to your monthly income. If your income is too low (by the credit card issuer’s standards), your credit limit increase request may be denied.
You had a credit limit increase recently. Don’t expect to get back-to-back credit limit increases. It’s best to wait at least six months before requesting another credit limit increase.
Your monthly payments have been too low. If you’ve been making only the minimum payment or only a little more than the minimum, it can mean that you can’t really afford your credit card balance. If you want a bigger credit limit, you’ll need to pay much more than the minimum. Aim to pay off at least the majority of your balance each month, if you don’t pay in full.
Your credit score is too low. Your credit score allows the credit card issuer to decide quickly whether to grant your credit limit increase request. A low credit score signals other credit problems that make you a risky candidate for a bigger credit limit. Check your credit score to see what factors are making it low. Your credit card issuer will also mail you a free copy of your credit score since it was used in the decision to deny your credit limit increase.
You have recent major delinquencies on your credit report. If even a single 30-day late payment can keep you from getting a credit limit increase, it should come at no surprise that more serious delinquencies like a collection or repossession will also get your credit limit increase denied.
What Happens After Your Credit Limit Increase Request Is Denied
Your credit card issuer will send a letter if information on your credit report or your credit score was the reason your credit limit increase was denied. The letter will name the primary factors that contributed to the decision and include your free credit score or instructions to order your free credit report.
If you anticipate wanting a bigger credit limit, use your credit cards in a way that will help you get approved. Make all your monthly payments on time. Use your credit card each month and pay off a significant portion of your credit card balance. Making big purchases and paying a lump sum towards your balance can help the case that you need a bigger credit limit. But, be careful that you’re not charging more than you can afford to pay. Finally, minimize your new credit applications in the months leading up to your credit limit increase request.
You may also wonder if credit card companies can lower your credit limit without notifying you.