If you’ve never asked for a higher credit card limit, you’re part of a majority — who could be missing out financially.
The results of a new Bankrate survey released today found that only 28 percent of cardholders have asked for a higher credit card limit.
Yet Bankrate also reports that increasing your limit can benefit you financially:
It might seem counterintuitive, but asking your credit card company to allow you to borrow more could actually make your future borrowing less expensive.
That’s because increasing your credit card limit can improve what’s known as your credit utilization rate, which can in turn improve your overall credit score.
According to Bankrate, 30 percent of your FICO credit score is based on your credit utilization rate — how much debt you carry versus how much credit has been extended to you.
Some people are more likely to be granted a credit card limit increase than other people, however. Bankrate’s survey found that among cardholders:
- Eighty-one percent who are age 30 or older have been granted a higher limit, compared with 46 percent of cardholders who are 18 to 29.
- Eighty-four percent of cardholders with an annual household income of at least $30,000 are granted a higher limit compared with 60 percent of cardholders with an income below $30,000.
Of course, this credit score-improving move is not for everyone.
If having more credit available to you would tempt you to carry larger credit card balances, for example, think twice. You could end up hurting your credit score, Bankrate reports.
Simply asking for a higher limit could also temporarily ding your credit score if the credit card company checks your credit in the process of granting or denying the request.
To avoid this, national credit expert John Ulzheimer tells Bankrate that you can ask your credit company to approve the highest credit limit increase that won’t trigger a credit check.
If you don’t know your credit score, you might want to find out where it stands before requesting a credit card limit increase. You can get your credit score for free from Credit Sesame.
Have you ever requested a higher credit card limit? Let us know whether your request was granted in our Forums. It’s the place where you can speak your mind, explore topics in-depth, and post questions and get answers.