In a world that is becoming increasingly independent of cash and where most people have a big chunk of their net worth online and in banks, it’s also becoming increasingly important to move in tandem with the times and get debit or credit cards. Credit cards often get a bad reputation. They are portrayed as evil, plastic, rectangles that will destroy your life the minute you get hold of one. But this isn’t true, as long as you know how to use one properly.
In fact, credit cards can greatly improve your credit score if you pay off your credit on time and have timely payments in all other areas. Having a good credit score, in return, can and will help in lots of areas, such as getting loans. Now, a lot of people aren’t satisfied with the credit limit they have.
They require more credit so that them maxing out their cards doesn’t reflect poorly on their credit score; instead, they want the usage of their credit card to increase their credit score. In this article, we’re going to talk about all of the details concerning credit limit increases and how you should go about getting one.
Why Should You Apply For Credit Limit Increase?
There are a few different reasons why one may apply for a credit limit increase. Two of the major ones are-
- More to spend- By definition, a credit limit increase implies that you will have more leeway with how much money you get to spend. If you want to make a big purchase and your credit card doesn’t have enough credit for you to spend then either that purchase will have to wait until you get a higher limit or you will have to go over your limit which will, in turn, harm your credit score. To make your spending easier without maxing your card, it is important to have a higher credit limit.
- Credit Score– As mentioned before, maxing out your card or going over the limit can harm your credit score. And as portrayed by popular media, just you having access to a credit card can ruin not only your credit score but also your life. But the latter isn’t true. In fact, a credit card can be your pathway to having a better credit score. Credit card companies put two things above all when it comes to credit score. First is the timely payment for everything that you need to pay for and second is the utilization of your card. What this means is that the lesser you spend with your card, the more it’s likely your credit score will increase. You shouldn’t spend at all since that is also a bad idea. Ideally, you should be using about 5-10% of your card’s limit.
When Should You Apply For Credit Limit Increase? How Much Should You Apply For?
You should only apply for a credit limit increase about a year or so after you get the card to avoid hard pulls. You should also not apply for many cards at once since that signals to banks that you are in need of money and are probably going to be in debt in some time.
You should ideally apply for anywhere from a 50%-100% increase of your limit since it’s likely that this will be approved without a hard pull if you have a good credit score that is. You should also make sure that your credit score is somewhere around 720 and above to increase your chances of getting your request approved.
What Are Soft And Hard Pulls?
Whenever you apply for a big loan or a new card, the bank you are applying to will check on your credit to make a decision about the approval of your request. You usually need to authorize checks like these. This is known as a hard pull. Hard pulls damage your credit score by a few points and the effects of this damage last for about two years, after which the hard pull is non-existent on your credit score.
On the other hand, soft pulls happen when a company or individual checks your credit to see if you qualify for any offers or even for a background check, such as for a new job. These do not affect your credit score in the slightest.
Examples Of Soft And Hard Pulls
Some examples of Hard and Soft pulls are-
- Mortgage Application
- Student Loan Application
- Credit Card Application
- Apartment Rental Application
- Checking your own credit score
- Employment Verification
- ‘Pre-Qualified’ credit card offers
Citi Credit Limit Increase – Hard Or Soft Pull
Citi Credit Card limit increases can incur both hard or soft pulls depending on your credit score and payment history. This is why it is recommended to have a credit score of 720, to wait until about 6 months after you acquire the card to apply for a limit increase and to apply for about a 50-100% increase only. Although you certainly could apply for more, doing this would lead to a hard pull automatically so keep that in mind.
How Should You Apply
There are two ways you can apply for a credit limit increase to Citi bank. One is online and one is through a phone call.
Which Credit Bureau Does Citi Use?
Citi Bank usually uses Experian but it can change depending on your location.
When Does Citi Bank Report To Credit Bureaus?
Citi reports to credit bureaus every month usually at the end of your billing cycle every month. But the information that Citi gives to Credit Bureaus doesn’t appear on your credit card for months although theoretically this is supposed to happen instantly.
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