Many Credit Card users complain that their credit limit is too low to meet their needs and have no idea how to raise it. This article will provide you with six smart tips for increasing your credit card limit.
What is Credit Card limit?
The Credit Card limit is, as the name implies, the usage limit set by the Credit Card company on a specific card. In other words, it is the most you can spend with your Credit Card. For example, if your bank or Credit Card Company has set a limit of Rs 50,000 on your credit card, you will be unable to use it to make purchases or conduct transactions in excess of that amount. The credit limit varies according to the type of credit card and your eligibility.
How can you increase the credit limit on your Credit Card?
Boost Your Credit Score
Because your credit limit is strongly influenced by your credit score, you must exercise caution. It is essential for increasing the credit card limit. The credit score is similar to a performance review for using a credit card, and it determines your creditworthiness. It will be easier to obtain a higher credit limit if you have never missed a monthly payment. As a result, you must first focus on improving your credit score through the use of the Credit Card. You can use the card to pay your monthly bills and demonstrate to the Credit Card Bureau that you use your card frequently to pay your bills and that you require a higher credit limit.
Repay dues on time
It is critical that you first pay off your credit card debts in order to persuade the credit bureau to increase your credit limit. Make sure to clear any pending dues from the previous month that have been carried forward first. Next, make an effort to pay off future bills in full before the due date. By making on-time payments, you can demonstrate to your Credit Card company that you can manage your debts wisely.
Be careful about the Credit Utilisation Ratio
The Credit Utilization Ratio is a measure of how much of your credit limit you are using in comparison to the maximum limit granted to you. Experts recommend that you keep this ratio below 30%. This will assist you in obtaining the maximum Credit Card limit in two ways. To begin with, a low credit utilisation ratio indicates to the credit card company that you do not use your credit card excessively to manage your expenses. Second, it is one of the most important factors that affects the credit score, after credit repayment history. A low credit utilisation ratio will improve your credit score and, as a result, help you obtain a larger credit limit.
Show proof of increase in income
The most important factor that credit card companies consider when determining the credit limit is the earning potential and ability to repay the dues on time. So, if you have received a raise in your salary or found another way to increase your income, show proof to the credit company and they will increase your credit limit.
Reduce the financial obligations you have
When you request an increase in your Credit Card limit, the banks or credit card company will undoubtedly consider the amount of debt you already have. This would include EMIs on a home loan, other credit card bills, a personal loan, and so on. If you have too many obligations, it is best to first reduce them and eliminate the fixed monthly payments before requesting an increase in credit limit.