The Single Best Way to Increase the Credit Limits on Your Credit Cards

A credit limit is the maximum you can borrow on a credit card. For example, if your credit card has a credit limit of $5,000, you could borrow up to that amount, but no higher. While credit limits are assigned upfront when you're approved for a new card, you might have good reasons to want to increase them, such as when planning for a large purchase. Likewise, since credit utilization makes up a large chunk of your credit score, increasing your total credit limits could also help your credit score.

While sometimes credit card companies automatically increase your credit limits as a reward for paying your bills on time, you could initiate the process yourself. It's actually pretty simple, but its success might depend on one important factor -- your household income.

Annual income plays a vital role in your card's credit limits

Credit card companies generally give increased credit limits to users who they deem low risk. If you use your credit card frequently and pay your bills in full and on time, a credit card company might not mind letting you borrow more, since you've proven you can pay it back. But if you've missed a few payments in the past, the same company might feel hesitant to grant your request for higher limits, especially if you're currently carrying a large balance.

That said, one way to improve the chances of getting a credit limit increase is to have undergone a change to your annual income. If it's been a few years since you've applied for your credit card, your annual income may have increased significantly without any corresponding change to your credit limits. Unless you inform your credit card company of your new income level, it might not even be aware that it has increased.

If that's the case, getting a credit limit increase might be as simple as updating the salary on your credit card account. You can typically do this online or within the card issuer's mobile app. In fact, I've requested credit limit increases on all three of my credit cards within their mobile apps and was granted approval instantly. If you can't request a credit limit increase online, you could also call your credit card company and ask for an increase over the phone.

A new credit card might come with increased limits

Another way to increase your overall credit limits is to apply for a new credit card. While this will result in a hard inquiry on your credit report, your credit score could still benefit if your credit utilization subsequently improves. You might even want to check out the best high limit credit cards to see if you qualify for higher-than average limits.

All in all, if your annual income has increased and your housing or rent payment has stayed the same, you have a good chance of getting a credit limit increase. Either way, it doesn't hurt to try it. Look at your card's mobile app to see if you can do this instantly or call the number on the back of your card to start the process over the phone.