Denied a credit limit increase? 3 ways retirees can boost their chances of approval

Retirement doesn’t mean your credit needs disappear. Whether you need access to additional credit for a home project, travel or something else, a credit limit increase can free up additional spending power without applying for new credit.

Credit limit increases are often less invasive than a brand-new application, but issuers still typically look at your payment history, credit score and, importantly, current income. Since retirees aren’t earning a regular income, you may face more challenges when it comes to credit card approval or credit limit increases.

If you’re retired and plan to request a credit limit increase, there are a few steps you can take to put your best financial foot forward. But before requesting a credit limit increase, it helps to understand how retirement can affect your credit profile (and why your credit score still matters).

CNBC Select discusses why credit and credit scores still matter in retirement, ways you can boost your credit limit approval odds and what to do if you’re denied.

The act of retiring doesn’t affect your credit score, but what happens financially when you retire — like a higher debt-to-income (DTI) ratio — could.

One of the largest factors of your credit score is your credit utilization rate. Even if your debt-to-income ratio increases in retirement, keeping your credit utilization below 30% can help you maintain a healthy score. Paying your bills on time is another incredibly important factor, so try to enroll in your credit card’s autopay feature if it offers one.

Why credit still matters in retirement

You might not pay as much attention to your credit score in retirement, but it’s still very important; a poor credit score can be expensive.

Many insurance companies consider your credit score when determining your premiums, with lower credit scores resulting in higher payments. According to Bankrate data, both home insurance and auto insurance can cost over 100% more for those with a poor credit score (or a FICO Score below 579) compared to an excellent score (800 and up).

Further, many landlords use credit scores to gauge a prospective tenant’s financial habits, and a lower credit score could make it harder to be approved.

Having a higher credit score is also helpful in securing the best financial terms for things like personal loans or mortgages. While you still could be approved with a sub-par score, that loan will likely be considerably more expensive.

If you’re looking for a way to monitor your credit score, Experian IdentityWorks offers both a free and paid version. You can use it to track changes to your credit report and to lock and unlock your credit file for additional security.

While you might not need a credit limit increase to cover day-to-day spending, having the flexibility of a higher limit could make your life much easier if a larger purchase pops up.

Double-check what counts as income

When you retire, you typically lose a consistent income, which can increase your DTI ratio. It can be helpful to check what banks or financial institutions consider to be income, as it’s often much broader than a traditional paycheck.

Oftentimes, things like your investment income (interest, dividends, etc.), disability insurance or workers’ compensation payments, child support payments and even royalty payments can count as income.

This may mean you can expand what you count as income, which could put you in a more favorable spot for a credit limit increase.

Ask a bank you have history with

If you have accounts with multiple banks and/or issuers, you might have the best odds with the institution you’ve been using the longest.

Many credit cards typically require you to wait around three to six months to request a credit limit increase, meaning your newest cards might not even be eligible. While each bank follows its own guidelines, keeping a positive relationship with your credit issuer could improve your chances.

If you’ve been a long-time customer or keep most of your money with a particular bank, it may be more willing to overlook factors that might otherwise reduce your chances.

Don’t close your older accounts

While simplifying your finances is a great goal in retirement, think very long and hard before you close your older credit cards.

Length of credit history is an important factor in your credit score, which is simply how long your accounts have been open, divided by the total number of accounts. Closing an older credit card has a more negative impact than closing one you opened last week.

To make sure an older card isn’t closed due to inactivity, consider tying it to a repeated, automatic monthly expense, like a streaming service or internet bill. That way, the card will still get used, and your credit history remains intact.

If you’re denied a credit limit increase, one of the first things you should do is reach out to your issuer. Legally, if an issuer denies you credit, it’s required to explain its specific reasoning. This can help you better prepare for future credit requests.

If you’re a homeowner looking for access to more credit, you could consider a home equity line of credit (HELOC), which lets you use some of your home’s value to secure credit. A HELOC is similar to a credit card in that it works as a revolving line of credit; it features limits and requires minimum payments each period.

However, it’s crucial to know that with a HELOC, you’re using your house as leverage, and missed payments could lead to foreclosure. If you’re looking for a lower-cost option, Bank of America doesn’t charge application fees or closing costs for HELOCs.

If your credit needs are urgent and you’d rather not wait for another limit increase opportunity, you could consider applying for a personal loan. Upstart considers lenders with lower credit scores or insufficient credit history, and loan amounts range from $1,000 to $75,000. Though Upstart offers quick access to credit, carefully consider the fees and higher APRs.

If you’re not in a rush for more credit or you prefer some of the safety that a credit card offers, take the time to improve your credit score. With Experian Boost®, you can connect certain monthly bills, like your water or phone bill, to your Experian credit file and get credit for positive, on-time payments. This can be a great way to get a little additional boost to your score, provided you pay your bills on time.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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