How to Raise Your Credit Limit - and How It Affects Your Score

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By Simon Zhen

Here's how you can increase your credit limits and how each method can affect your credit score:

1. Automatic Increases

Credit card issuers will periodically review customer accounts to determine if customers should get a credit limit increase. If so, card issuers may automatically hike credit limits without prior notice.

Automatic credit limit increases tend to be more common for credit card accounts with relatively low limits. As your credit limit gets higher, it is less likely the issuer will voluntarily hike your limits.

Since credit card issuers typically perform a soft credit inquiry when evaluating a customer's account for automatic credit limit increases, there is no negative effect to credit scores.

2. Requested Increases

If your credit card issuer doesn't voluntarily offer to hike your credit limit, you can always ask. First, wait six months after opening a credit card. Second, you may want to tread with caution because a customer-requested credit limit increase could result in a hard credit inquiry, which will ding your credit score temporarily -– regardless of whether or not an increase is granted.

Many major card companies allow customers to request a credit limit increase through their online accounts. Be prepared to provide your annual income and monthly housing costs. Some issuers will initially ask you for your desired credit limit. Others will offer a credit limit increase based on their own risk formula after you've given your financial details.

%VIRTUAL-article-sponsoredlinks%The information required and the type of credit pull used during credit limit increase requests can vary from card issuer to card issuer.

Consumers who are wary of how their credit scores might be affected can call a card representative to ask if a hard pull will be made for a credit limit increase. They can then decide if they want to proceed with the request.

Whether you opt to make your request online or by phone, you may receive your desired credit limit increase immediately if your finances justify that credit limit. Or the issuer will respond with a counteroffer, which you can accept or decline. Typically, this causes only a soft pull.

If you are not happy with a counteroffer or have your original request denied, you should have the option to press further and ask for a manual review of your account. This usually means a hard pull on your credit reports, which will hurt your credit score.

3. Card Limit Transfers

A third choice is more tedious and could negatively affect your credit score.

With most credit card issuers, card holders are allowed to transfer a portion of a credit card's spending limit to another credit card account, as long as both cards are from the same issuer.

For instance, if you have a Chase (JPM) Freedom and Chase Slate card with a $2,000 spending limit on each account, you can move $1,000 of the Chase Slate card's limit to the Chase Freedom card.

Some people may even open another credit card from the same issuer with the sole intent of transferring part of the new card's limit to an existing card.

Remember, however, that opening a new credit card causes a temporary dip in your credit scores. Furthermore, if you decide to close the new card soon after transferring the spending limit, it will hurt your credit score even more.

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Why Your Bank Thinks Someone Stole Your Credit Card
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How to Raise Your Credit Limit - and How It Affects Your Score

One reason why Marquis' gas purchases might have triggered a fraud lockdown? Filling their tank is a common first move for credit card thieves.

"Some of the things they look at are small-dollar transactions at gas stations, followed by an attempt to make a larger purchase," explains Adam Levin of Identity Theft 911.

The idea is that thieves want to confirm that the card actually works before going on a buying spree, so they'll make a small purchase that wouldn't catch the attention of the cardholder. Popular methods include buying gas or making a small donation to charity, so banks have started scrutinizing those transactions.

Of course, it's not a simple matter of buying gas or giving to charity -- if those tasks triggered alerts constantly, no one would do either with a credit card. But Levin points to another possible explanation: Purchases made in a high-crime area are going to be held to a higher standard by the bank.

"It's almost a form of redlining," he says. "If there are certain [neighborhoods] where they've experienced an enormous amount of fraud, then anytime they see a transaction in the neighborhood, it sends an alert."

(Indeed, Erin tells me that one of the gas purchases that triggered an alert took place in a rough part of Detroit, which she visited specifically for the cheap gas.)

People who steal credit cards and credit card numbers usually aren't doing it so they can outfit their home with electronics and appliances. They don't want the actual products they're fraudulently buying; they're just in it to make money. So banks are always on the lookout for purchases of items that can easily be re-sold.

"Anytime a product can be turned around quickly for cash value, those are going to be the items that you would probably assume that, if you were a thief, you would want to get to first," says Karisse Hendrick of the Merchant Risk Council, which helps online merchants cut down on fraud. Levin says electronics are common choices for fraudsters, as are precious metals and jewelry.

Many thieves don't want to go through the rigmarole of buying laptops and jewelry, then selling them online or at pawnshops. They'd much prefer to just turn your stolen card directly into cold, hard cash.

There are a few ways that they can do that, and all of them will raise red flags at your bank or credit union. Using a credit card to buy a pricey gift card or load a bunch of money on a prepaid debit card is a fast way to attract the suspicions of your credit card issuer. Levin adds that some identity thieves also use stolen or cloned credit cards to buy chips at a casino, which they can then cash out (or, if they're feeling lucky, gamble away).
 

When assessing whether a purchase might be fraudulent, banks aren't just looking at what you bought and where you bought it. They're also asking if it's something you usually buy.

"The issuers know the buying patterns of a cardholder," says Hendrick. "They know the typical dollar amount of transaction and the type of purchase they put on a credit card."

Your bank sees a fairly high percentage of your purchases, so it knows if one is out of character for you. A thrifty individual who suddenly drops $500 on designer clothes should expect to get a call -- or have to make one when the bank flags the transaction. If you rarely travel and your card is suddenly used to purchase a flight to Europe, that's going to raise some red flags.

Speaking of Europe, the other big factor in banks' risk equations is whether you're making a purchase in a new area. I bought a computer just days after moving from Boston to New York, and had to confirm to the bank that I was indeed trying to make the purchase. Levin likewise says that making purchases in two different cities over a short period of time raises suspicions.

"I go from New York to California a lot, and invariably someone will call me [from the bank], " he says. Since one person can't go shopping in New York and California at the same time, any time a bank sees multiple purchases in multiple locations in a short period, it's going to be suspicious.

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