Quick insights
- Your credit limit can increase or decrease for a variety of reasons.
- Changes to a credit limit must be initiated by either the cardholder or the card issuer.
- Although the reasons for a credit limit change can vary, how you manage your credit card is an important factor.
Your credit limit is among the most important terms of your credit card account. Although this amount is initially set when you open a credit card account, your card’s limit can change for several reasons.
Who can change your credit limit?
Your credit limit can be changed by your credit card issuer, either at your request or the issuer’s discretion. You can submit a request to change your credit limit by contacting your card issuer directly. Requesting a credit limit change does not guarantee the change will occur. Your issuer will evaluate your request and reply with a decision.
In addition, card issuers may periodically review your account and adjust your credit limit. Whether you or the issuer initiates the change, the decision to increase or decrease a credit limit is based on several factors. In either situation, your credit card issuer will notify you of a credit limit change.
What factors can increase your credit limit?
Several factors can influence whether you’re eligible for a credit limit increase, but something or someone has to initiate the change process. Whether you request a credit limit increase or it’s the result of a periodic review by your card issuer, here are several factors that affect the result:
Reporting changes to income
A borrower’s income is an important factor when lenders make any sort of credit decision. While income is only part of the evaluation criteria,reporting new information about your income could improve your eligibility for a credit limit increase. Your card issuer typically considers this information when reviewing a credit limit increase request or conducting any periodic reviews of your account.
Maintaining a positive payment history
Paying your credit card bill on time each month creates a positive payment history. Whether you pay your balance in full or the minimum amount due, you can create a positive record of payments and show an ability to manage credit responsibly. When you request a credit limit increase, a positive payment history could make a credit limit increase more likely.
Managing your credit utilization
The amount of credit you use compared to your total available credit is called your credit utilization ratio. A low ratio can demonstrate that you manage your credit responsibly. You can keep your credit utilization low on a credit card by making regular payments that lower your balance.
What factors can decrease your credit limit?
Although you can request a lower credit limit on your credit card, this type of change happens more often when the card issuer initiates it. A credit limit decrease can be brought on by several different factors.
Your credit activity changes
There are several negative ways you could use a credit card account, such as frequently maxing it out and paying late or missing payments altogether. These credit activities often have negative consequences, and lowering a credit limit may be the first step a card issuer takes in response.
The economy or bank policy changes
Credit card companies assume a certain amount of risk when issuing credit and credit cards, and limits are set for different reasons. Those are usually specific to the applicant or cardmember, based on things like income and credit score. However, bank business and economic conditions may also be reasons to decrease a credit card limit.
Economic conditions may affect people’s spending habits and their abilities to pay credit card bills. Bank policies can also change in response to the broader economic landscape or the business’ performance. Lowering credit limits may sometimes be used as a risk-management strategy.
When to expect a credit limit change?
You could expect a credit limit change in one of two scenarios: When you've requested a change or when your card issuer initiates one. Either way, the result can vary based on different factors. However, creditors will write to you within 30 days of a possible credit limit change.
In many cases, your account also has to be open for a certain amount of time before you can request a credit limit change. Lenders generally require a credit card to be open at least six months before considering a credit limit increase.
