Ways to Increase Credit Limit with Poor Credit

It may seem remiss of those with poor credit to want to increase their credit limit, as it could be perceived as an invitation to run up more debt. It is actually an excellent way for credit card holders with poor or bad credit to improve their credit score. Credit scores are determined by a number of factors and the level of credit utilization is one of them.

If your credit card limit is for example $1000, and you carry a $500 balance, then you are using 50% of your available credit which is too much for the Fico scoring system. However if you obtain a credit increase of 50% to $1500 then your credit utilization drops down to 33%, just above the advisable upper limit of 30%. Thus your credit score would improve.

There are several ways to increase your credit limit with poor credit. The simplest way is use a current card in a responsible manner, by using it and paying the balance off in full, and on time, each month. This establishes a pattern of good payment which the card issuer will notice when you request a credit limit increase. If you have a new credit card wait six months before asking for a credit limit increase as you need to demonstrate good payments first.

A word of caution is necessary to those with credit cards issued by some sub prime lenders: a number of lenders actually charge for raising your credit limit so read the small print in the terms and conditions prior to applying, or ask before you request the increase. First Premier charge a whopping 50% of any credit limit increase given as a fee, so a credit increase of $200 would cost $100.

Another way to increase your credit limit is to obtain a new credit card. If a new line of credit is opened it increases your overall credit availability which helps to improve your credit score even if you never use the card. However if you have poor credit it will be difficult to obtain a new credit card  unless you resort to a sub prime lender with high interest rates, and processing fees. Some carry annual fees too. A better method would be to obtain a store card which have less strict criteria and are easier to obtain.

If you are turned down for unsecured credit then obtaining a secured credit card is a viable option if you look for a low fee one. Secured credit card issuers are usually willing to increase the credit limit within a year of responsible usage of their card.

Remember not to apply for too many new lines of credit at once or this will have a detrimental impact on your credit score. Start with your existing card issuer once you have ensured a responsible pattern of use, and you are likely to obtain a credit limit increase which will in turn help to improve your credit score, but only if you don’t max it out. Stay within the 30% guideline of credit used in ratio to your total available credit.