Learning how to increase credit card limit can prove to be beneficial in times of need. A credit card issuer sets your credit limit depending on many factors like income and age, among others. It is the maximum amount you can spend using your credit card.
However, it’s not impossible for your credit card issuer to increase your limit. To do this, you have to make a request and meet certain criteria, like having a good credit score. Having a better understanding of the process can increase your chances of enhancing your credit limit.
Setting a Credit Limit
Many card issuers have set specific criteria for determining your credit limit, which include
- Age and income
- Payment history
- Existing loans and liabilities
- Credit score and creditworthiness
On the whole, the limit depends on your ability and likelihood to repay on time. Before proceeding, you must know the key difference between the total credit limit and the available credit limit:
Total Credit Limit | Available Credit Limit |
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Various Methods to Expand Your Card Limit
You can choose to increase your limit depending on your financial needs and spending habits. By following simple financial discipline, you can increase your creditworthiness, making the process smoother.
- Update your Income Information: Inform the issuer about any increase in your income by submitting your recent pay slips. This will help you in requesting for a limit increase based on your needs.
- Clear Your Liabilities: Issuers check your pre-existing loans before approving your request for a credit limit increase. Pay off all your existing loans, including personal and auto loans, if you can. This will give you a better chance to get an increased limit.
- Maintain Credit Utilisation Ratio (CUR): Spending to the maximum limit gives an impression that you depend on credit for your regular purchases. Try to use only 30% of your credit limit to maintain your CUR. This will ensure a good credit score, too.
- Pay Before the Due Date: Set reminders for due dates and pay off your balance in full and on time. This practice will help you avoid high interest rates and late payment penalties. It will also help issuers see you as a responsible user of credit and give you quick approval on your request to increase your limit.
- Use the EMI Option: You can opt for EMI conversion of your outstanding balance, if you can’t pay in full. That way, you can avoid a default, which can inhibit you from getting a higher limit in the future.
Benefits of Enhancing Your Limit
Make timely payments to avoid penalties and maintain a disciplined record to improve your creditworthiness. This will help you get a higher limit, which has several benefits.
- Access to More Credit: With an increased income, your spending habits may also increase. You can access more funds with an enhanced credit limit and spend according to your new lifestyle.
- Acts as an Emergency Fund: Your improved credit limit can be beneficial and can get you access to credit during emergencies. Be it a medical emergency or an urgent financial need, you can simply use your credit card without the lengthy approval process associated with taking loans.
- Increased Trustworthiness: When your request for increased credit limits gets approved, it shows your card issuer sees you as a responsible borrower. This helps strengthen your credibility when you apply for a personal or a home loan.
- Perks and Rewards: With an improved card limit, you can use it more often and earn higher reward points. A card with a high limit may also allow you to enjoy other benefits like better reward programs, access to airport lounges, discounted flight bookings and more.
- Better score: A higher limit gives you more room to spend without crossing the 30% mark. This can help you maintain a low ratio of credit utilisation, which, in turn, helps you boost your credit score.
- Add-on Credit Cards: An increased limit can be split between any add-on card holders you want. This allows your family members to also benefit from your credit limit while you maintain control over spending.
This information will help you make a smart decision on how to increase your credit card limit without getting rejected. One way you can pay bills on time and track your spends to be more responsible is by using the right card. The One Credit Card is an excellent option as its full-stack mobile app helps you set spending limits and stick to your budget. It also helps you check your transactions and easily manage your finances.
You can also earn up to 5X reward points on your top two spending categories each month. What’s more, you can save with offers on dining, entertainment, shopping, travel, education and fuel. Apply online to enjoy the benefits of this lifetime-free credit card!