There are many reasons a smart business owner might need access to additional credit. Your cash burn rate could be too high, it might be time to reinvest in updated infrastructure, or you could want to bring on additional workers for the busy holiday season. Whatever the cause, an increase on an existing small business credit card is often the easiest path.
Unlike opening a new account, crowdfunding, or vying for angel investors, getting a higher limit doesn’t usually require jumping through as many hoops. You’ve already provided much of the information and documentation needed to qualify for the credit line originally; now you need to simply demonstrate that a raise is in the creditor’s best interest. Here are some strategies you can try to bump up your available credit in time to cover your next big expenditure.
Asking for Additional Credit
While it’s possible to get your line increased without doing all of these, your odds improve significantly if you can follow the plan to the letter:
1. Identify which card you want to increase
It’s not wise to just randomly choose a card. If you have a card that you love using more than others, that offers better perks, or that you have a good history with, choose this one. Avoid requesting a limit increase from any card that you may have a bad history with (such as a late payment in the last year or that you’ve gone over limit recently.)
2. Build six months of stellar performance
When you know which card you want to increase, make sure that you have at least half a year of on-time payments at more than the minimum monthly requirement. If you’ve paid off the card in full at some point, this is even better.
3. Check for automatic increases
Most cards to account reviews every six months and will automatically offer you an increase, if eligible. That doesn’t mean that you can’t inquire, however. If it’s been at least six months since your last increase, it’s acceptable to prompt a review on your own. If you’ve gotten a recent increase, however, the odds of a second so soon isn’t likely.
4. Keep utilization low
Aim for overall use of 10% of your available credit lines across all cards. This may mean you need to shuffle balances around to spread out the debt. (Avoid balance transfers with high transaction fees, however.) Anything less than 30% will probably get you in the approval range, however, so make sure you don’t have cards charged up to the max before you inquire. This is especially true of the card you are hoping to get increased.
5. Demonstrate credit-worthiness
You’ll most likely be asked for an updated income or revenue number before you are approved; have documentation of your assets, debt, sales, or other relevant numbers to back up your claim that you’re worth the risk.
6. Ask for the increase online
Many cards let you ask for a limit increase with a button click. If not, make sure your appeal over the phone is as business-like, as possible. If asked why you want the increase, explain that you are trying to build your credit score for later investment. Don’t appear desperate or mention any money troubles that the increase will help offset. You must continue to appear to be a good bet for the additional funds. If you’ve been using the card for a long time, emphasize how much you’ve enjoyed the relationships with the card company and that you’re a loyal customer.
7. Be conservative
You may be asked how much money you want to apply for. Other cards will just offer an amount they think is realistic. You may get approved for just a portion of the amount you request. In all of these situations, it’s wise to not extend your credit by more than a fraction of your existing limit. Most cards won’t give more than 20% in one request, for example. Don’t ask for an extreme amount; you’ll more than likely get declined.
After you’ve made the request, you may find out right away (which is the case with many online applications), or you could be told it will take a few days. Don’t read into the timeframe as a sign of a yes or no. In the case of a business line, there is usually some verification that goes on behind the scenes, and it can take the issuer time to make the right call. If you’re not approved or declined instantly, you’ll get a letter in the mail within 5-10 business days.
When Rejection Happens
If, after trying all these methods, you are unable to get a higher credit limit, it may be related to your credit score. Creditors are unlikely to offer additional credit to someone with only a very recent credit history to review. If your credit is overextended, this may also cause a hard “no.” Finally, remember that each time you ask for a credit increase, you are putting a hard credit inquiry on your history, which can ding your score by a point or two. If you get a rejection from one card, resist the temptation to call up all your cards and try again. You can get a better look at your business credit score for free with Nav.
Each inquiry (whether it results in approval or rejection) can temporarily decrease your business credit score, resulting in a major drop if practiced too often. Your goal is to get your credit profile to a place where creditors feel good about giving you more money; these small drops in your score can put you further away from that goal. Consider asking just one card for more money, taking time to build your credit score, and then trying again a significant time later.
This article was originally written on November 1, 2018 and updated on February 1, 2021.