*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Aug 28, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
If you’re a business owner who’s happy with your rewards business card, but sometimes find yourself needing a higher credit limit, there’s good news — with good behavior and a good relationship with your bank, you may be able to request a higher limit on your existing card.
Before you make the request, here are some things that can help your chances of success.
In this article:
- How to increase your odds of success
- How to ask for a credit limit increase
- Start the process early
- Options for when a credit limit increase is denied
- The bottom line
How to increase your odds of success
A history of on-time payments is key to having a good credit reputation, whether business or personal. Elaine Pofeldt, a personal finance expert and author of the book “The Million-Dollar, One-Person Business,” suggests cardholders put themselves in the shoes of the lender: “What would make you want to lend more money to someone?” A cardholder who consistently pays on time or one with a history of missing payments?
And though you should do your best to keep your utilization ratio low (the amount of your debt compared with your total credit limit) by only using a small portion of your available credit, there is a rare exception, explained Khary Scott, vice president of business development for Capital One Small Business Card.
“While it is never guaranteed, using a majority of your credit line and paying off your card in full every month might help you to raise your business card credit limit,” Scott said. A lender may be more apt to increase the credit limit with evidence of timely repayments after reviewing your purchase behavior.
How to ask for a credit limit increase
When you contact your card issuer to ask for a credit limit increase, have your business records on hand to show how your business is performing.
“If they don’t seem to notice how well you’re doing, tell them,” Pofeldt said.
“While it is never guaranteed, using a majority of your credit line and paying off your card in full every month might help you to raise your business card credit limit.”
This is the point where having a good relationship and good line of your communication with your bank can help. You may get what you’re asking for, or you could get advice on how to get to where you need to be for a better chance at approval.
“Oftentimes, just reaching out to your provider and asking for a credit limit increase can do the trick,” Scott said. “If you are declined, your provider will give you a reason for that decline, which can help you understand what steps you may need to take.”
It also doesn’t hurt to gently insinuate that you may have to take your business elsewhere or mention other card offers you’ll have to consider if the issuer cannot comply with your request.
Start the process early
It’s one of the dichotomies of the credit card world — when you need more credit isn’t a great time to apply for it. You don’t want to give the impression that your business doesn’t have enough cash coming in to operate successfully.
“Requesting it when you need it is what’s going to be suspicious to the bank,” said Krista Tuomi, an American University professor and entrepreneurial finance expert. If you see your monthly charges are rising over time, it’s best to take action early in case your request is rejected, which can lead you to look for other credit sources on the fly.
Options for when a credit limit increase is denied
If you make your request online and get rejected, follow up by phone. This is known as “recon” — short for reconsideration. You might have an opportunity to present more information than when making your initial request.
However, there’s no guarantee a recon will result in an approval, but it’s worth a try. If that doesn’t work, another option is to apply for a second small business card with a different issuer.
“If you are declined, your provider will give you a reason for that decline, which can help you understand what steps you may need to take.”
You can also try requesting a credit limit increase again after letting some time pass. If you do so, make sure you understand why you were rejected in the first place, and if there were any issues with your finances, make sure you’ve fixed them.
“There’s no magic number for how long to wait, but three to six months would be reasonable,” said Matt Schulz, chief industry analyst for CompareCards. “If it’s your very first card, it may make sense to wait a year.”
When you’re thinking about trying again for a credit limit increase down the road, it can be smart to avoid applying for more cards in the intervening time.
“If you’ve applied for several cards recently, it can make you appear overly desperate,” Schulz said.
Patrick Jones, a spokesman for American Express, urged cardholders to call in and speak with an American Express representative for questions about credit limits.
“We know that no two businesses are alike, and American Express offers a range of both charge and credit cards for businesses to consider depending on their specific business needs,” he said. “One unique feature that American Express offers on The Blue Business® Plus Credit Card from American Express*, for example, is expanded buying power which enables card members to spend above their credit limit so they can get extra reward points on larger business purchases, like inventory, equipment or advertising, and also so they can take advantage of opportunities if and when they arise.”
A business charge card may offer an alternative to a business credit card. Charge cards differ from credit cards in that they have no preset spending limit; however, anything you put on the card must generally be paid off in full each month. For more details, read our guide on the pros and cons of business charge cards.
If you were denied a credit limit increase because your business isn’t bringing in enough revenue, for instance, consider options to cut down on your expenses and increase your cash flow.
“[The bank has] a vested interest in partnering with you,” Pofeldt said. But, she added, that only goes so far — you have to pay on time and show you’re not a risk to the bank.
The bottom line
In short, make sure you have all your ducks in a row before requesting a credit limit increase on your business card. Your payment history should be excellent and you should have financial records ready to demonstrate your business’s success. If you’re denied for a credit limit increase, call your issuer and ask for a recon.
If turned down, consider your options. You might apply for another small business credit card that suits your needs — or you might find a charge card is a better option instead.
*Terms apply to American Express credit card offers. See americanexpress.com for more information.