How to Get a Business Credit Card Limit Increase

How to Get a Business Credit Card Limit Increase

How to Get a Business Credit Card Limit Increase

As a small business owner, credit cards can be essential to running your business. You may need high credit limits to cover employee spending, a large purchase, or just to pay for myriad everyday expenses. 

If your business credit card limit isn’t high enough to meet your needs, you have two options:

  1. Get a new card with its own credit limit, or
  2. Ask for a credit limit increase on a current card

Here we’ll focus on the second approach: getting a credit limit increase. But if that doesn’t work, or if you prefer to get a new business credit card, Nav can help you find your next business credit card. 

Note that some business credit card issuers don’t have stated credit limits. Instead they will advertise cards with “no preset spending limit.” That does not mean you can spend any amount you choose. The issuer will still limit the amount you can charge based on their assessment of your businesses’ ability to pay back whatever you charge.


Pros And Cons Of Getting A Business Credit Card Limit Increase

Is This The Right Time To Ask For A Credit Limit Increase?

If you need additional credit for a specific reason; a large purchase, for example, you may wonder when the best time is to request it. 

There’s no formula that dictates when to ask for a credit limit increase, but usually you’ll want to wait until you’ve had the card long enough to demonstrate a history of on-time payments. That usually means waiting until you’ve had the card at least six months, and perhaps even a year, if necessary. 

Other good times to ask for a credit limit increase on a small business credit card is when your financial circumstances have improved (in particular, when income is higher), or when your credit scores have improved by at least 20 points or more. 

However, some cardholders have success asking for a credit limit increase when they first receive a card. If you get a card and the limit seems small, you may be able to request a higher limit provided your qualifications are strong. We’ll discuss those in a moment.

If you decide to ask for a credit line increase right away, be sure you ask the issuer whether there will be a hard credit inquiry on your personal credit report. Hard inquiries affect your credit scores, while soft inquiries don’t. While the average inquiry takes only a few points off your scores, if there has already been a hard inquiry when you applied, you may want to hold off. 

4 Factors That May Increase The Chances Of A Small Business Credit Limit Increase

There are several factors that can work in your favor when it comes to requesting a small business credit limit increase. 

1. High Credit Scores 

Excellent credit scores can help you qualify for higher credit limits. Most conventional small business credit cards issuers check personal credit so your personal credit scores should be at least 680—700 or higher. A few issuers will check business credit history, and some corporate credit cards don’t check personal credit. Generally though, good credit scores are required to qualify and to get higher limits.

Payment history is the most important factor in calculating credit scores. Paying bills on time is essential to maintaining good credit.

Another factor that can quickly impact your creditworthiness is “credit utilization rate” or “debt usage ratio.” This factor compares your credit limit to your balance to see how much of your available credit you’re using. There’s no specific percentage you must stay below but it’s usually a good idea to use 20—25% or less of your available credit. 

With business credit cards this factor may be less important, at least in terms of personal credit scores. Many small business credit cards don’t report to personal credit unless you default so utilization on a business card may not affect your personal credit scores. Instead, utilization on personal credit cards may be a key factor.

Still, high utilization may impact your business credit scores though, so if you’re trying to establish good business credit, keeping credit card balances low on these cards may be helpful. 

It’s smart to check your personal credit with all three consumer credit bureaus, and your business credit before you apply.

2. High Income/Revenue

Higher annual income also helps when it comes to qualifying for a higher credit limit. Small business owners may not realize that with business cards issued through major issuers, you can qualify based on income from all sources, not just business income. That means if you have a side gig or you’re just starting a business, you may be able to qualify based on other income sources such as a day job or even household income, if it could be used to pay the credit card bill. 

If your income increases, let your issuer know. Most credit card companies make it easy to update your income on your account profile. 

For corporate cards, business revenues will be key. You may need to supply business bank statements or connect your business bank account so the issuer can analyze cash flow to help you qualify. 

Another option available through some corporate card issuers is to prepay a business credit card or to allow the issuer to debit your business bank account to pay off your balance, usually on a daily or weekly basis. Depositing funds with the issuer or paying off the balance quickly may help you qualify for a larger credit line based on your business bank account deposits. 

3. High Usage

Once you get the card, using it for frequent purchases may help qualify you for a higher limit. Issuers make money when you swipe your credit card, and they specifically target business owners because they know they tend to charge more. The fact that you charge a lot on the card may work in your favor. 

4. Moderate Debt

While using your credit card frequently can be positive in terms of getting higher limits and earning rewards, make sure you keep any balances you don’t pay off in full at a reasonable level. Issuers want to earn money from the interest cardholders pay, but they also carefully monitor risk. The US economy is in an uncertain position and issuers are doing their best to avoid unnecessary risk in the event of a downturn.  High balances may indicate higher risk to the issuer. 

Also, as a business owner, you want to make sure your balances are affordable in comparison to your income so you don’t wind up with unmanageable debt if your business slows down. 

4 Circumstances That May Prevent A Credit Limit Increase

Sometimes entrepreneurs ask for high credit limits because the business is experiencing a financial crisis and they need access to funds quickly. This may backfire, either if the issuer detects the business is in financial stress, or if the business runs up debt it can’t pay back. These red flags may result in a denial of your request for more credit:

1. Credit Problems

Late payments that appear on personal credit, and/or business credit, or late payments with the issuer itself, can result in a denial. A track record of high balances and only making the minimum payment can also hurt your chances of getting your limit raised. 

Similarly, high utilization on the card you’re targeting for an increase may trigger a decline based on the issuer’s policy. 

2. Declining Income/ Revenue

With many small business credit cards, the issuer relies on the income stated on the application, so it may not know your income has decreased. However, the issuer will likely ask you about your income if you request a credit line increase and it’s important to be truthful. In cases where the issuer has access to your business bank account statements, lower income will hurt your chances of getting approved for more credit. 

3. Low Usage

If you don’t use the card often, and pay it in full, you’re probably not a profitable customer and the issuer may not be as likely to offer you a credit line increase. 

Keep in mind that card issuers make money in two main ways: 

  1. Interest on balances paid by the cardholder
  2. Swipe fees paid by merchants 

Each time you swipe your card the merchant pays an interchange fee and part of that goes back to the card issuer. (It’s that interchange income that allows them to pay you, the cardholder, cash back or reward points.) 

If you’re not using the card much and not paying interest, you’re probably not a profitable customer and that may work against you when asking for an increase.

4. Issuer Policies

Certain issuers and certain cards aren’t likely to offer generous credit limits. Most issuers don’t share those policies or guidelines with the public, so you probably won’t know what their internal rules dictate. 

How Do I Request A Credit Limit Increase?

Some issuers make it easy to make a credit limit increase request online. Log into your account online or in the issuer’s mobile app and look for an option to request a credit line increase. The issuer may ask you to update income information to help evaluate your request. Often you will get an answer quickly, especially if you’ve held the card for a while. 

You may also try calling the issuer’s customer service phone number on the back of your card to request a credit line increase. Again, they may ask you information about your income to help process your request. 

Another option, if you hold multiple cards from the same issuer, may be to transfer a credit line from a card you no longer want to one you do. This can allow you to get a higher credit limit on one card, while keeping your overall credit limits the same. You may also be able to eliminate an annual fee this way. Ask your card issuer if this is an option.

Nav’s Verdict: Business Credit Card Credit Limit Increases

The bottom line is that businesses often need higher credit limits than consumers, especially as the business grows. Higher credit limits can give your business access to the funds it needs without having to manage a large number of credit cards. 

While it may sound counterintuitive, the best time to ask for a credit limit increase is when you don’t need it, and your finances are strong. Line up credit before you need it and you won’t scramble to get it when you do. 

If you can’t get higher credit limits on cards you already have, consider getting a new business credit card. If you need access to more financing, Nav can help your business find lines of credit and small business loans.

Frequently Asked Questions About Business Credit Card Limit Increases

How Do Credit Cards Decide To Increase Limits?

Credit card issuers each develop their own policies and processes for increasing credit limits. Many will automatically review accounts from time to time to decide whether to increase the credit limit. A cardholder can also typically initiate a review for a credit limit increase by requesting one online or by phone. 

When they do review credit limits, card issuers may take into account the cardholder’s VantageScore or FICO® score, information from the credit report, and account activity to determine whether to offer or approve an increase in the amount of available credit. 

Also keep in mind that factors that have nothing to do with your financial situation can affect your request. During the 2008 financial downturn, for example, many issuers cut credit limits due to economic uncertainty and other factors. 

How Often Can I Ask for a Credit Increase?

First, check if your issuer has any specific rules around a credit limit increase. For example, some issuers won’t allow a cardholder to request a credit limit increase on a new credit card for the first few months after the account has been opened. 

And some credit builder cards may require cardholders to make a certain number of payments on time before requesting a review.

If there are no restrictions, that doesn’t mean you should request an increase every month. It makes more sense to request an increase when something has changed that might increase your chances of approval, such as an increase in your income or credit scores. 

Some credit card issuers will conduct a “hard” credit check that could impact your credit score. Although the impact from a single hard inquiry is usually small (in the range of 2-7 points), these can add up. Check with your card issuer if this is a concern. 

What Is the Best Way To Ask for a Credit Limit Increase?

There’s no single best way to request a higher credit limit. If your card issuer offers the ability to request it online (or in their mobile app) and you feel comfortable asking that way, feel free to take advantage of that option. If you’d rather call the issuer and talk to someone, you can request a credit limit increase that way. 

The advantage of the phone call approach is that if your request is not approved, you may be able to ask to be transferred to someone who can reconsider your request immediately. However, even if your request is denied online you can reach out to the card issuer to talk with someone. 

What Is the Average Credit Limit for a Credit Card?

Credit reporting agency Experian regularly publishes helpful data on credit usage, including credit limits. Here’s what they report for average credit limits by age cohorts. All data is from the third quarter of the year listed: 

2021 (Q3)2022 (Q4)
Generation Z (18-25)$9,857$11,290
Millennials (26-41)$22,136$24,668
Generation X (42-57)$33,694$35,994
Baby boomers (58-76)$38,898$40,318
Silent Generation (77+)$31,937$32,379
Source: Experian data from Q3 of each year; ages as of 2022

What Is the Best Credit Card for Increasing Your Credit Limit?

When it comes to credit card limits, the type of card may be as important as the issuer. Higher credit limits are usually associated with premium credit cards (such as gold cards or platinum cards, for example) as well as with business credit cards. 

Most premium credit cards start with generous credit limits, while standard credit cards may have lower limits. Of course, there are plenty of exceptions and the qualifying factors mentioned in this article will have a lot to do with the credit limit you or your small business gets. 

Find the Best High Limit Business Credit Cards Here

What Are the Consequences of Exceeding Your Credit Limit?

There are a couple of possible consequences of exceeding your credit limit on a credit card. 

First, is the risk of an over limit fee. Fortunately these are exceedingly rare due to the Credit Card Act of 2009 which significantly curtailed over limit fees. Before you can be charged one of these fees on a consumer card, you must opt-in to allow your card issuer to let you make purchases over the limit and charge over limit fees. 

If you have opted in to these fees, typically you can be charged a fee of up to $25 the first time you exceed your credit limit, and up to $35 if you are over your limit a second time within six months. The over limit fee can’t be larger than the amount you went over the limit. (For example, if you went over your limit by $15 you could not be charged more than $15 for an over the limit fee.) Again, it’s very rare to see these fees on either consumer or business credit cards. 

The bigger risk when you go over your credit limit is the potential impact to your credit scores. If your balance is greater than your credit limit, and you don’t pay it down before the issuer reports to the credit bureaus, your account will show 100%+ utilization. Your utilization ratio is an important credit score factor, and a high credit utilization ratio hurts your credit scores. 

If you consistently exceed your credit limit, your issuer may even flag your account as high risk and close your account. 

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