What is a credit limit?

Your credit card has a limit, which is the maximum outstanding balance that you can carry at any one time without being penalized or having your charges declined. Your credit limit is determined by several factors, including the type of credit card you’re using, your income level, and your credit score. If you aren’t sure what your credit limit is, it should be displayed on your latest statement.

Should I increase my credit limit?

There are many reasons to increase your credit limit. But before you request an increase, think carefully about the benefits and risks of having more access to credit. After all, having thousands of dollars in potential debt at your fingertips may not be a good thing.

Benefits of a higher credit limit

A high limit will often result in a higher credit score, because it gives you a lower credit utilization ratio. Your credit utilization ratio is your outstanding balance relative to your credit limit. For example, if you have a credit card with a $5,000 limit, and you maintain a $1,000 balance, your credit utilization ratio is 20%. Your credit score will be highest if you keep your credit utilization ratio under 30%.

A second benefit to a higher credit limit is that you can use your card to charge large purchases, like home renovations. If you charge these large purchases to a travel rewards or cashback card, you’ll greatly increase the points or cash back you’ll earn in one year. But be sure to have a plan to pay off the balance before your grace period ends, because carrying a balance will result in more interest charged than you’ll earn in rewards.

Drawbacks of a higher credit limit

A downside to a higher credit limit is that it exposes you to the risk of accumulating more debt than you can handle. If you aren’t in the habit of paying off your credit card every month, and you tend to carry a balance, then increasing your credit limit may not be a good idea. Remember that the more credit you have access to, the higher your maximum debt load will be, and the more you might end up paying every month in interest.

Another slight drawback to requesting a credit limit increase is that your card issuer might initiate a hard credit score check to determine if they will grant your request. A hard credit score check can temporarily reduce your credit score.

Steps to increase your credit limit

If you use a credit card responsibly for at least six months, you might receive a notice from your card issuer indicating that you’ve been pre-approved for a credit limit increase. But if your card issuer doesn’t reach out to you, you’ll need to be proactive and initiate the request yourself. And there are a few steps you should follow to optimize the chances that your request will be successful:

1. Check your credit score.

Lenders will use your credit score to determine whether you are a trustworthy borrower. If your credit score is low, your application to increase your credit limit may be denied, so check your credit score before you put in the increase request to your card issuer.

Want some tips on how to improve your credit score before you submit your credit limit increase request? Check out the below video:

2. Make sure your reported income is up to date

Has your income increased since you originally applied for your credit card? If so you should ensure that your card issuer is aware of that, as they may consider your income when determining your credit limit.

3. Reduce your credit utilization

If you have a lot of outstanding debt, and an overall credit utilization above 30%, your card issuer might not agree to increase your credit limit.

Determine your credit utilization by making a list of all the different revolving credit sources you have (like credit cards and lines of credit), adding up their combined credit limits, and then adding up the combined balances you currently carry with each. Divide the combined balance figure by the combined limit figure and multiply the result by 100. If that number is higher than 30, you should try to pay off some of your balance before you request a credit limit increase.

4. Figure out the limit you’ll request

Because your credit limit is based on a variety of financial indices, there’s no hard and fast rule as to how high a limit your card issuer will give you. That said, you can generally expect a limit of between 5–15% of your annual income, depending on your credit score, overall debt level, credit utilization ratio, and monthly expenses.

5. Formally request an increased limit

You can make a request to increase your credit limit by going to a physical branch of your card issuer or bank; calling your card issuer and executing the request over the phone; or making the request online via your card issuer’s website. If you do submit your request online you might nonetheless be called by a representative to verify some financial details, like your income.

What to do if your credit limit increase is denied

Even if you have all your ducks in a row, your credit limit increase request could be denied. If this is the case, you should ask your lender why they’ve denied your request. The answer may be a simple misunderstanding or misinterpretation of your financial data, which can be easily corrected. Before speaking with your card issuer about the reasons for their denial, be sure to arm yourself with justifications that you can give the card issuer to make them reconsider, like the following:

  • Amount of time you’ve been a customer
  • Strong payment history
  • Low credit utilization
  • Recent income increase

If your card issuer still refuses to budge, you might consider taking your business elsewhere and applying for a new credit card from a different issuer.


How high should my credit limit be?

You can expect a credit limit between 5–15% of the annual income you report to your card issuer, depending on your credit score, credit utilization ratio, debts, and regular expenses

Will my credit limit increase automatically?

Your credit card issuer may periodically reach out to you about getting your consent for a credit limit increase, particularly if you’ve demonstrated responsible use of the card for 6 months or more. Most card issuers will not increase your credit limit without your expressed consent.

Will a request to increase my credit limit hurt my credit score?

When you request a credit limit increase, your card issuer might elect to do a hard pull on your credit report. This can temporarily reduce your credit score. You should always ask your card issuer if they will execute a hard pull when evaluating your limit increase request.

How often can I ask for a credit limit increase?

After you receive a new credit card it’s generally advisable to put in about 6 months of responsible card use before requesting a credit limit increase. After that you can request a limit increase every 4 to 6 months.

This post was not sponsored. The views and opinions expressed in this review are purely my own.

About the Author



Money.ca Editorial Team

The Money.ca Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Money.ca Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.

What to Read Next

AIR MILES rewards guide

Our AIR MILES rewards guide shows you how earn AIR MILES faster, how to redeem AIR MILES and how get the most out the AIR MILES Canada program.


The content provided on Money.ca is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.