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.
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.