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Need more spending power? Here's how to raise your credit limit

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Need more spending power? Here's how to raise your credit limit

There are plenty of good reasons you may need a higher limit on your credit card.

You could be using your personal rewards credit card to pay for reimbursable business expenses, but your limit might not quite cover your monthly cost. Perhaps you are planning to self-finance a major purchase, such as a home appliance with your card. Or it could be you simply want to increase your credit score by lowering your credit-utilization ratio.

Regardless of the reason, you wouldn't be the only one contemplating an increase. To increase the chances your request is granted, follow these steps.

Don't ask too soon

If you have a brand-new card, you're going to need to sit on it for a while before requesting an increase. New customers may be viewed as an untested risk for issuers, and they may want to see how you handle your current credit before offering you more.

Some cards will automatically review and adjust credit card limits after six months. Others require cardholders to wait longer. For example, Wells Fargo requires cardholders to wait a year after opening an account to request a limit increase.

Keep your payment history clean

It should go without saying you need a clean payment history if you want to get an increase for your credit limit. Being late three out of the last four months isn't going to do it.

If you have a blemished payment history, wait until you get some distance between the late payments and the time of your request. That said, if you have a long history of timely payments and one recent missed payment, the issuer might be willing to overlook it, especially if you have good reason for the delay.

Have a good reason for the increase

Speaking of good reasons, you need to have one to explain why you need a higher credit limit. That reason could be a specific purchase you plan to finance with your card. Or even saying you want to lower your credit-utilization ratio can be enough to request a limit increase. Without a good reason, issuers may become worried you plan to spend indiscriminately and rack up a balance you can't pay off.

Remind them there are other fish in the sea

If the initial response from the customer service rep is negative, there is nothing wrong with reminding them you have plenty of other credit card offers from which to choose. Tell them you would prefer to keep your business with their company and ask if there is a supervisor who can review your request.

Limit your request to your best credit card

Finally, limit increase requests can affect your credit in the same way as credit card applications. Namely, they result in your credit report being pulled, and these inquiries can cause a temporary dip in your credit score.

Not only that, if credit card companies see multiple hits on your report from other card issuers, that may send up a red flag. Companies may become nervous you appear desperate for more money, and when issuers are nervous, they are more likely to say no.

Rather than take a scattershot approach, zero in on your best credit card and make a strong case to that one company for an increase. If they say no, wait a month or two and try again with a different issuer.

Getting a limit increase can make your best credit card a little better, but be smart about your new spending power and don't forget to completely pay the balance every month whenever possible.