Increase your credit limit every six months

Did you know you can increase your credit limit on your credit cards every six months? It’s simple. Just pick up the phone or get on your credit card company’s website. No hard credit check needed (if you do it right)!

To give an example, when I got my first credit card in college, a Citi card, I was ‘granted’ a $4,000 credit limit. Not bad for a college kid with no credit history other than student loans. I spent my credit wisely and paid off my balance in full each month, and after a few months rolled around I pulled up my account information online and requested an increase in my credit limit. Within seconds I was granted an increase to $5,500 or so.

Now, a few years later, I have a credit limit of $8,500 on the same card, and a $15,000 credit limit on an AMEX card. I have a zero balance on the Citi card and a small amount on the AMEX card but it’s at 0% APR for another year or so and I’ll have the card paid off within the next 30 days.

There’s not too much magic that goes into getting your credit limit raised – it varies from card issuer to card issuer, but in general if you follow the four rules I’ve outlined below you’ll always get an increase if you request it:

1. Wait at least 90 days after opening your account
2. Be sure your account is in good standing
3. Keep your credit usage below 30% of your total limit
4. Don’t request two increases within the same six-month period

If you follow those few rules above, you’re golden. Now, most card issuers can increase your limit using some sort of automatic calculation based on your credit history and your reported income, but if you want an increase higher than the instantly approved amount, the card issuer will have to run a hard credit check which could negatively impact your credit score for a little while. Just a word of caution.

To digress, after everything I’ve mentioned above, it might seem that I’m an advocate of credit cards and a high credit score. I mean, I have two credit cards after all. But, quite the opposite is true. However hypocritical I am, I despise credit cards and the weight our society places on credit scores. However, by the same token, I understand the need of having a credit card and a high credit score while I’m still freshly starting out on my wealth-building journey. I’m not a homeowner yet, and I expect to be one within the next five years, so I do value my score.

Before this turns into too much of a tangent, the short story is that you should always be looking to raise your available credit limit. It’ll raise your credit score if you handle your money wisely, and it’ll increase your cushion in the case of an emergency (though I’d wonder what happened to your real emergency fund if you have to fund your emergency with a credit card). I advise never getting a credit card if possible, but for the millions and millions of us that have them, do your financial life a solid and raise your credit limit.