The first way to increase your credit score is to take out your credit card flip it over
and call the number on the back of your card.
And then all you have to do is…brace yourself for this one…ask for a credit limit increase.
Mind-blowing I know but we've got a ton of other ways that you can significantly increase
your credit score by 10s of thousands of dollars including the strategy I used to go from a
$500 credit limit to $50,000 in available credit at 22.
Alright, let's jump right into it.
What is going on everyone I hope you are all having a fantastic day.
So like I just said the easiest way to increase your credit limit is literally to just call
your credit card company and ask.
They're probably going to ask if you have had any substantial changes in your income
and I do want to let you know that in some cases requesting a credit limit increase can
trigger what's called a hard inquiry and therefore may have a short-term impact on your credit
score.
Now personally I have never experienced this however I do know that it is a possibility
so it's something that I did want to make you aware of.
We've got four other ways to increase your credit limit by tens of thousands of dollars
and then we're also going to talk about why you would want to do this and how it can actually
save you thousands of dollars as well but we'll get to that later.
So similar to the first strategy the second way to get a huge credit limit increase is
actually by requesting an increase online.
So if you're of a younger generation and you're uncomfortable calling someone on the phone…first
I would say step outside your comfort zone and call the number on the back of your card…you'll
thank me later..but second of all a lot of credit card providers will let you request
a credit limit increase through their website.
Obviously, every site is going to look a little bit different but the example I always love
to give is the Discover it credit card which as many of you know was my very first credit
card, and when I got that I had a limit of just a few hundred dollars because I had no
credit history.
But now after having that card for several years my credit limit with just that card
is $6500 and with discover specifically all you have to do is log into your, select card
services at the top of the screen and then select credit line increase.
Then they are just going to ask you your updated income and housing payment information and
in my experience, they will instantly either approve or deny you for a credit limit increase.
Now even if you have had a substantial change in your income, they are going to take some
other variables into account including how much of your current available credit are
you using, are you a regular user of that product, and other variables as well.
And the reason for that is if they currently give you a $5000 line of credit but you're
only spending 50 bucks a month then you don't really need a credit limit increase and therefore
they're probably not going to give it to you but again it really depends on your situation
and your numbers so it doesn't hurt to go ahead and ask and see what happens but again
I would still recommend calling the number on the back of your card because I have definitely
had better success talking to a real person as compared to allowing the computer and their
algorithm decide the fate of my credit limit.
Moving on from there, the third strategy that is probably the fastest way to significantly
increase your credit score is by applying for a new credit card.
This one might leave some of you scratching your head but this is by far my favorite strategy
considering I have a ridiculous amount of credit cards but remember that in terms of
calculating your credit score and your total available credit, that is calculated by adding
up all of the credit that you have meaning every single credit card.
So if you currently only have one credit card that has a $1000 limit then your total available
credit is $1000.
But if you go ahead and apply for a new credit card and they offer you a $2000 limit then
your total available credit is now $3000 meaning you just tripled your total available credit
and if you are strategically climbing the credit card ladder you probably picked up
a new card that is going to give you cash back and rewards in a new spending category.
Add on top of that the fact that increasing your total available credit is good for your
credit score and applying for a new credit card kind of seems like a no brainer if it's
a good time which again will talk more about in a second.
But in case you don't make it to the end of the video what I will say is please do not
take this as…go and apply for 10 credit cards at once…because trust me that is not
a good idea for a lot of reasons.
Coming in at #4 is definitely the most boring strategy but does work and is largely how
I was able to increase my discover it credit card limit and that is just waiting for an
automatic increase.
You may have experienced this with your own credit cards but a lot of times as you show
the credit card company that you are a reputable borrower and you always pay your statement
on time every time without fail and are using a good amount of your available credit it's
very possible that they will automatically increase your credit limit without you having
to do anything.
In my case, I think I requested a credit limit increase once over the five years that I had
my discover it card but every other increase happened automatically without me even knowing
about it.
I no longer use my discover it credit card just because I have more premium products
that I use meaning these automatic increases don't really happen anymore because I'm not
using the available credit that Discover has given me but if you only have one card and
you use a lot of your available credit then you might just wake up one day and be surprised
to learn that they doubled your credit limit so keep an eye out for that.
Alright before we get into the insane advantages and reasons why you would want a credit limit
increase, the fifth strategy that is more of a bonus since it falls into a gray area
would actually be getting what's called a charge card.
A charge card basically works in the exact same way as a credit card the only difference
is that it has to be paid when your statement is issued which is usually once a month.
But the benefit of this is that charge cards usually have no limits or if they do have
a limit it is ridiculously high and somewhat unspoken.
American Express is probably the best-known company that issues charge cards like the
American Express gold and platinum cards and while these aren't necessarily unlimited since
they do have a spending power tool, I have spent 10s of thousands of dollars on these
cards in one statement cycle and never had any issues with meeting some unspoken limit
or anything like that.
Plus in the case of American Express, you can go into the app and click on check spending
power and type in the amount that you plan on spending if it is some crazy number and
it will tell you whether or not that transaction will be approved before you ever make that
purchase.
So something like a charge card is not necessarily going to give you the benefits that we're
going to talk about next but if your purpose for wanting a credit limit increase is solely
to have more credit available to you then getting a charge card is probably the fastest
way to drastically increase your credit score.
The furthest I have ever pushed my American Express gold card was $20,000 in one statement
cycle so well I could probably go higher than that we're going to call that the limit for
today's video and add on top of that the credit limits for all of the other credit cards that
I have and that means that at 22 years old I currently have over $50,000 of credit available
to me.
Alright, so those are the five easiest ways to drastically increase your credit limit,
and a lot of those you can literally do right now and most likely increase your credit limit
by thousands of dollars but why in the world would anyone want to do this and how can this
save you thousands of dollars as I mentioned at the beginning of the video.
Well, a lot of you already see where I'm going with this but it really boils down to your
credit score.
One of the largest factors that makes up your credit score is called your credit utilization
which is basically a percentage of how much of the total available credit you have used.
So if you have a $1000 credit limit and you spent $100 that means your utilization would
be 10%.
If you spent all $1000 that means that your utilization would be 100% and the higher your
utilization the worse that is for your credit score.
Typically so-called experts will say that you want to keep your utilization below 30%
but I'd say you want to keep it below 10% and if possible you should pay off your card
before your statement even arrives so that your utilization actually remains at zero.
But enough about all of that, the point I'm making here is by requesting a credit limit
increase or applying for a new credit card, you are increasing your total available credit,
and assuming your spending stays pretty much the same, that is going to decrease your credit
utilization.
So going back to the example we just talked about if you’re total available credit went
from $1000 to $10000 then spending that same $100 goes from being 10% utilization all the
way down to 1%.
And if you spent 1000 bucks well earlier that was 100% of your available credit which remember
was really bad but now 1000 bucks is only 10% utilization which again is good for your
credit score.
Plus increasing your credit limit is increasing the total available credit that you have like
I mentioned earlier which is also good for your credit score and if you add a new credit
card you are increasing the total lines of credit which you guessed it…is also good
for your credit score.
And as many of you know a higher credit score almost always means a lower interest rate
when it comes time to borrow money on a car or a house or anything else for that matter.
And when you're talking about borrowing hundreds of thousands of dollars over a long period
of time with something like a mortgage, a percentage rate change from even 5% to 3%
can and will save you thousands of dollars in the long term.
So do yourself a favor take out your credit card flip it over and call that number on
the back because it could be a phone call that saves you thousands of bucks in the long
term.
Be sure to check out some of my favorite financial tools down in the description below including
an offer from the point cash back debit card that will currently give you $100 when you
open your account and make your first purchase and of course be sure to hit the like button
subscribe to the channel and share this video with someone who you think would get value
out of this content as well.
As always thank you so much for your time I really do appreciate it so much take it
easy and I'll see you in the next one!