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When to ask for a credit limit increase

CNBC Select reviews when you should ask for a credit limit increase, how a credit limit increase affects your credit score and the ways to request a credit limit increase.

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Asking for a credit limit increase can be necessary when times are tough and your credit limit doesn't fit your increased spending habits. Many Americans are facing financial hardship due to the ongoing coronavirus pandemic, and requesting a credit limit increase can help ease the burden of stocking up on groceries and other essentials.

But before you ask your card issuer for a credit limit increase, you should consider what potential affect a higher credit limit could have on your credit score and whether an increase will really help your financial situation or only hurt it.

Below, CNBC Select reviews when you should ask for a credit limit increase, how a credit limit increase affects your credit score and the ways to request a credit limit increase.

When is the best time to ask for a credit limit increase?

When you're approved for a credit card, your card issuer will assign you a credit limit. This amount can be anywhere from a couple hundred dollars to tens of thousands of dollars. As the length of time you've had the card increases, typically so will your credit limit. These increases may occur automatically, as prompted by your card issuer.

But there are instances, such as the coronavirus pandemic, that may spur you to ask for a credit limit increase sooner than waiting for an automatic notice.

However you should only ask for a credit limit increase if you're confident that you won't overspend. Any purchases made on your card that aren't paid off by the due date will incur the regular APR, unless you're taking advantage of a 0% APR period. (Learn how 0% APR credit cards work.)

Here are some of the best times to ask for a credit limit increase:

  1. When you have good credit: If you have good credit (scores 670 to 739) or excellent credit (scores 740 and greater), that signifies you're responsibly managing your credit. This signals to your card issuer that you can likely handle an increased credit limit.
  2. When you get a raise: If you recently got a raise, this can be a great time to update the income listed on your credit card account, which may result in an automatic credit line increase within a few months. You can also request a credit limit increase and enter your new income. This shows the lender you have the ability to afford more expenses.
  3. When your spending habits change: Major events, such as marriage, buying a house or starting a family, can drastically alter your spending habits. You may incur more expenses from grocery shopping for your family or purchasing furniture for your home that require an increased credit limit.

When is the worst time to ask for a credit limit increase?

While you may jump at the chance to ask for a credit limit increase if you're strapped for cash, it may be wiser to hold off. Credit limit increases aren't risk-free. You could see a ding in your score if your card issuer pulls your credit report to verify if they should approve a credit limit increase or not.

To play it safe — here are some of the worst times to ask for a credit limit increase:

  1. When you have bad credit: If your credit is bad (scores below 580), there's a slim chance you'll be approved for an increased credit limit. And if you ask for a credit limit increase that results in a hard pull of your credit, it can ding your score further. A better option is to build your credit and ask for an increase when you have a good credit score.
  2. When your income has decreased: A recent layoff, demotion or job switch that resulted in a lower income can hurt your chances of receiving a credit limit increase.
  3. When you maxed out your card: If you're already nearing your current credit limit and carrying a balance month to month, you're not in the best position to ask for more money. Consider paying off debt first.
  4. When you just opened the card or requested a credit limit increase: Many card issuers require you to wait at least three months after account opening before requesting a credit limit increase. And you may have to wait six months between credit limit increase requests, such as with Citi cards, like the Citi® Double Cash Card.

How to ask for a credit limit increase

Credit limit increases can happen automatically with no action on your part, or by your request. Automatic credit limit increases may happen annually or if your card issuer notices you recently updated your income.

If you want to ask for a credit limit increase, it can typically be done in one of two ways: online or over the phone. Online requests can be done via your card issuer's mobile app or by logging into your online account. For instance, if you have the Chase Sapphire Preferred®, Chase's website states you can "sign in to get an instant decision on your credit line increase request."

You can also call your card issuer to discuss an increase and provide your reasoning why. This can be a good idea if you don't have increased income but want to explain your need for more credit and provide reassurance that you can repay it.

When it comes time to make the credit limit increase, make sure you have the following handy:

  • Annual income
  • Employment status
  • Monthly housing payments (rent or mortgage)
  • In some cases, you can also provide a new suggested credit limit

In most cases, you can expect to receive an instant decision on whether you're approved for a higher credit limit increase, or denied. If you're approved for an increased credit limit, make sure you don't misuse the increased buying power. Continue to make payments on time and in full.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.