Credit Limits Are Not Set in Stone: 7 Things To Do If Your Credit Limit Changes
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Written by
Cynthia Measom
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Edited by
Levi Leidy
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Reviewed by
Jasmin Baron
When you apply and are approved for a credit card, the issuer sets your credit limit based on various factors like your credit score, credit history and income. After that, it monitors your use of the card and may raise or lower your limit over time.
Your credit limit might go up if you always pay on time, your credit score improves, you report higher income or you ask for an increase. It could drop if you miss payments, take on more debt, rarely use the card, or if there’s an error on your credit report or signs of identity theft.
Find out what to do if you experience a credit limit change, especially if it’s been reduced.
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Contact Your Credit Card Issuer
If your credit limit is decreased, contact your credit card issuer to inquire why your credit limit changed. Perhaps you haven’t used the card in over a year, or maybe you missed a payment. Ask your creditor what steps you can take to have your credit limit reinstated. Also, consider mentioning positive factors that might influence the decision, such as your years of on-time payment history or a recent increase in your income.
If your creditor refuses to reinstate your credit limit, avoid closing your credit card. Doing so can negatively impact your credit utilization, which can lower your credit score.
Review Your Credit Report
Your credit report may have errors, which could result in a credit limit decrease. To see if this is the case, you can go to AnnualCreditReport.com and request your free credit reports from all three credit bureaus: Equifax, Experian and TransUnion. (Note: Credit bureaus maintain unique files about your credit history, so it’s important to check your credit reports from each bureau.)
If you find an error on any of your credit reports, such as late payments that didn’t occur, file a dispute with the credit bureau that reported the information.
Pay Down Your Debt
Consider paying down any credit card debt you have if your credit limit is decreased, because it can lower your credit utilization. Credit utilization is the amount of credit you’re using across all of your accounts, and it makes up 30% of your FICO credit score. Many experts recommend keeping your overall credit utilization under 30%.
Open a New Card
If one of your credit card issuers lowered your credit limit, opening a new credit card can also increase the amount of available credit you have. That matters because it can lower your credit utilization to or below the recommended amount of 30%.
For example, if you have a credit card with a $5,000 limit and a $1,200 balance, a credit card with a $3,000 limit and a $500 balance and a credit card with a $2,500 limit and an $1,800 balance, your credit utilization is 33%. So, opening a new card — say, with a $1,000 credit limit — could decrease your credit utilization to 30%.
However, before opening a credit card, you should think carefully about why you’re applying and if it’s a good fit for you. Having a credit card you never use can end up hurting your credit limit and credit score in the long run if the issuer closes it due to inactivity. You should also be careful not to spend more than you can afford on your credit cards, as carrying balances over time can lead to costly interest charges.
Request a Credit Limit Increase on Other Cards
If you don’t want to open a new credit card account, consider requesting a credit limit increase on one of your other credit cards, which can also decrease your credit utilization. Some credit card issuers allow you to make the request online, while others require you to contact them directly.
Be aware that creditors may initiate a hard inquiry to check your credit before deciding on an increase. For most consumers, each hard inquiry can cause up to a five-point drop in their scores and can stay on their credit report for up to a year.
Use All of Your Credit Cards From Time to Time
Just like you need to carefully consider opening a new credit card, you must also pay attention to your existing ones. To avoid a credit limit decrease or account closure due to inactivity, consider paying for recurring charges each month, such as a gym membership, streaming service or other subscription, with a card you don’t use. Then, pay off those charges when you receive your next billing statement to avoid having to pay credit card interest. Doing this will keep your card active and show responsible use.
Avoid Overspending
To keep your credit score and finances healthy, and increase your odds of achieving a higher credit limit, it’s important to avoid overspending. Always keep spending low and try to pay off your balances in full each month so your credit utilization across all accounts doesn’t exceed 30%.
