Credit card has become a necessity of our life. Due to not having a credit card, we miss out on many types of discount offers and other benefits. However, credit card limits limit a lot. Credit card users should be aware of this. Credit limits should be taken seriously, as this has a great impact on your credit score. If your credit card has a low credit limit, instead of spending more than this limit, you should increase its credit limit. So through this article, we are going to tell you how you can increase the credit card credit limit.
What is the credit limit?
Credit limit is the limit to which you can make purchases with your credit card. This credit limit is set by the credit card issuing bank. It is decided based on your credit score and repayment history. So the credit limit of different customers varies depending on the type of card and the qualification of the customer. Applicants who do not have a credit history are more likely to have a lower credit card credit limit, as the credit card issuing bank is accustomed to their repayment capacity.
How do banks set credit card limits?
When customers apply to issue credit cards to banks, they determine the eligibility of the customer through several factors. It consists of the following factors –
- Applicants’ Family Income
- Applicant Age
- Current loan
- Number of previous loans
- Income and employment status
- Repayment history and credit score etc.
How to increase credit card limit?
By applying for a new credit card – You can apply for a credit card other than the existing card as income increases. You can choose for yourself one of the best cards from different banks’ credit cards, which gives you additional benefits. In addition, if you are using your existing credit card well, there is also a possibility of getting another card with a higher credit limit.
By requesting to increase the limit of existing card – Banks often increase the credit limit of existing cards. Low credit limits are not always there. If you often use your credit card and pay the full amount at or before billing, the bank is given the option to increase your credit limit. You can request the bank to increase the credit limit and the bank will increase your credit limit after verifying your current credit score and repayment history.
annual growth – Most banks increase the credit limit of existing credit cards on an annual basis. Just for this you have to maintain a good credit score and pay your dues on time. Sometimes banks offer an increase in the credit limit on an annual basis and sometimes you have to request it. If you do not need a higher credit limit, then it is better to have a higher credit card credit limit, because you know that you need less money.
Increase Your Credit Score – Banks primarily base your credit score when setting credit limits. Keep your expenses within your credit limit and pay all your dues or EMIs on time. This way you can maintain a good credit score, with the help of which you can get a credit card with a higher credit limit.
Benefits from the increasing credit limit
By increasing the credit card credit limit, you can get some additional benefits on the credit card. Below are some of the benefits that you can get –
Helpful in availing loan – When your credit card has a higher credit limit and you do not spend more than 30% of it, financial institutions assume that you are less expensive and usually your income is sufficient for your expenses. Along with this, it shows your management in terms of money. If you ever apply for a loan, in this case your loan application is more likely to be approved.
Emergency Assistance – Having a higher credit limit means you have more upfront cash. You can use it in any financial or medical emergency and at this time it can serve as an additional source of finance.
Helpful in reducing the credit utilization ratio – Credit card users are already aware of the importance of credit utilization ratio. Higher credit limits can help keep your credit utilization ratio down. This helps in improving your credit score.