It is very true that credit cards give you financial stability by allowing you to make purchases for which you can pay later. But, there is always a fixed amount up to which you can spend using your credit card, and this maximum amount is known as your credit limit. However, many card issuers also allow you to spend beyond your credit limit but it is not at all advisable to do so. Then, what to do if you are not able to manage your expenses with the credit limit provided to you or if you need a credit limit increase for some reason? The answer is simple; you can get your credit limit increased. Through this article, we are aimed at making you understand different ways to increase your credit limit. Go through the complete article to know more:
What is a Credit Limit?
The credit limit is the maximum amount your credit card issuer or money lender provides you to spend within a particular time period. The credit limit provided to you depends upon your creditworthiness. If you have a good credit history, you will surely get a good credit limit whereas if you seem to be a risky borrower to the bank, they will more likely provide you with a low credit limit. However, you can get your credit limit increased in several easy ways as mentioned below:
1. Improve Your Credit Score
From credit card application to the setting of your credit limit, your credit score plays a huge role in your whole credit journey. So, if you are having a low credit limit, there are high chances that your credit score is not good and you need to improve it. Improving your credit score is totally in your hands; what you need to do is just use your credit card responsibly and wisely. Pay your bills on time, don’t use 100% of your credit limit, minimize hard inquiries, and do everything that is required for a better score. With a good credit score, it would become easier quite for you to increase your credit limit.
2. Request Your Card Issuer To Increase Your Credit Limit
If you want to increase the credit limit of your existing credit card, you can apply for the same. Almost all the card issuers understand their customers’ financial needs and allow them to request a credit increase. However, their decision depends on different factors, including your income, credit score, payment behaviour, loyalty to the bank, etc. Also, if you use multiple credit cards, request the credit increase for one you use more often.
Most of the card issuers even offer an increased credit limit every year to their customers who show responsible payment behaviour throughout the year. You can check if your bank is also offering the same or not. Sometimes, the banks provide you with an annual limit increase even if you don’t need it at that particular time. It is one of the easiest ways to get your credit limit increased just by making payments on time the whole year.
3. Keep Your Bank Updated With Your Financial Status
Your bank might not be aware of the increase in your income and hence may not allow an increased limit to you. So, it is really essential for you to keep your bank updated with your current income so that they provide you with a higher credit limit every time your get promoted. You can either ask them to increase the limit on your current card or issue a new credit card with a higher limit that matches your current financial requirements. However, you should have valid proof showing your promotion/increased salary in order to do so.
4. Apply For A New Credit Card With Higher Limit
It is one of the best ways to get an increased credit limit through a new credit card. If your existing card doesn’t provide you with a sufficient limit even after your request, you can apply for a new credit card that comes with a higher limit. Having multiple credit cards will not only provide you with a higher limit but will also help you maintain a good credit utilization ratio and hence will improve your credit score.
5. Pay Your Bills On Time
The payment behaviour of a credit cardholder is among the most important factors that are considered when deciding the credit limit. A decent payment behaviour can help you get a higher credit limit whereas a non-responsible payment behaviour can leave you with a low credit limit and high debt as well. So, make sure to pay your credit card bills on time. Try paying the full amount due instead of making only the minimum payment to get your credit limit increased.
Benefits of Getting Your Credit Limit Increased
- Low Credit Utilization – To get a good credit score, it is not advisable to utilize 100% of the credit limit provided to you. You should use only 30% of your total available credit, which is not much possible with a credit card with a low credit limit. However, with a higher credit limit, it will become far easier to manage your expenses with a lower percentage of credit limit being utilized.
- Helpful in case of emergencies – A higher credit limit might seem like a blessing in case of emergencies. If you need immediate funds, you will not need to apply for any additional instant loan or to borrow it from someone when you will have a credit card with a high credit limit.
- Make big purchases smoothly – With a credit card providing a high credit limit, it becomes far easier to make big purchases, such as home appliances, furniture, and many more. Many credit cards nowadays come with purchase protection plans and an extended warranty period so that you can avoid loss in case the product is damaged.
These were some of the popular and most significant ways to increase your credit limit. However, there is a common thing that you will require no matter which of these methods you choose and that is to maintain a good credit score. No card issuer would like to give a high credit limit to a person who is not responsible and who doesn’t have good payment behaviour. So, along with keeping all the above points in mind, try to do every possible thing to achieve an excellent credit score or to maintain at least a good one.
If you still have any doubts about how to increase your credit limit, make sure to write them in the comment section below. You can also share your experience of getting a higher credit limit.