If you don’t have a long credit history one thing you’ll notice is that it’s hard to get credit cards with large credit limits. In most cases this is not an issue because you can simply pay off the card early and then reuse the limit for that month. Unfortunately some cards require a minimum credit limit to be approved (e.g World MasterCard’s have a $5,000 minimum limit).
Lenders usually don’t want to be the first ones to extend you a large credit limit, as it’s an increased risk for them. Whereas if they see you already have high limits they are more likely to give you an equally large limit as they can see you haven’t abused it.
American Express is one issuer that’s not afraid of giving larger limits, possibly because they charge merchants more to process their cards and thus make higher profit margins and can tolerate greater risks. Whatever the case they usually offer high credit limits.
Increasing your credit limit can also help you to have a lower overall credit utilization (assuming you spend the same amount), as the amount of total credit you have available is increased. This is an important scoring factor for the FICO score. Although this positive can easily be matched by simply paying your credit cards before the statement posts to reduce the amount of debt you have that is reported to the credit bureaus.
The interest rates on most American Express cards are quite high, if you often find yourself with maxed out credit cards that aren’t paid off within the grace period then this guide is NOT for you.
The best thing about American Express is that it’s easy to get your credit limit approved by up to 200% of it’s current limit. For example, if you’re limit is $1,000 you can get it increased to $3,000. Below is our short guide to getting this increase:
Rules For American Express Credit Limit Increases:
- You must wait a minimum of 60 days after a card is opened before requesting a credit limit increase from American Express, unless you have another American Express issued credit card that has been open for at least six months
- You must wait a period of six months in between credit limit increases from American Express. This applies across all of your American Express cards.
- If you’re denied, you must wait 90 days before applying for an increase again
- If you successfully receive a credit limit increase you can apply for another one after six months. In general this is much more difficult to receive than the first increase unless your income has gone up significantly.
Tips For Receiving A Credit Limit Increase:
- Decrease the amount of debt you have with other credit card issuers. Make sure your credit cards off before the statement posts, this way the reported balance will be 0. A common denial reason
How To Request The Credit Limit Increase
- Call the number on the back of your card and follow the prompts. Requesting a credit limit increase is usually button 3 or 4 after calling the initial number. OR
- Log into your American Express account
- Click profile & preferences
- Click more options
- Under account management click “manage credit limit”
- Click start then follow the prompts
When requesting the increase, make sure you request a limit that is three times your opening limit if you want to increase your limit by the maximum allowed. For example, if American Express gave you a limit of $3,000 request a limit of $9,000.
What To Do If You’re Denied:
If you’re denied, it’s not the end of the world. After all it was only a soft inquiry and you had nothing to lose. American Express is required to send you a letter of adverse action notice when this happens, this will list the reasons as to why you were denied for the credit limit increase along with any credit score they used in the decision.
Try to improve on the reasons they gave you for denial if possible (see our tips section) and then wait 90 days before trying again.
Don’t believe this works?
Why not read over 73 pages of success stories (mixed with some failures as well, but nobody really fails as you have nothing to lose) in this myFICO forum thread.
You can find out if other card issuers do a soft or hard pull by clicking here.