Today, having a credit card is quite convenient and something that we find helpful for everyday purchases. But for most of us, the fact that there is a billing limit put in place means that it’s sometimes impossible to go above a certain number every month in our spending.
It is thus important to set a credit card limit. Not only does it help the spender but also the lending institution.
Several factors are critical in determining credit limit after you apply for credit card. If you overspend, you risk being unable to pay off the outstanding balance and losing a lot of money on interest charges.
It’s essential to be smart about this, as there are various things that business owners and personal users should consider when establishing their card limits.
What is a Credit Limit?
A credit limit is a maximum money you are permitted to spend on a credit card or line of credit by a lender.
Manage your credit, manage your life.
Having a good credit line is all about knowing when to stop and not buying more than you can pay for; in the present and future—learning how to hold yourself back will come in handy if you want or need something expensive later on, like a car or perhaps a house.
What is the Importance of Having a Credit Limit on Your Card?
Your credit score is dependent on many factors. Sometimes it becomes difficult to understand just how important using your cards responsibly will help you finance your future needs. Additionally, understanding the idea of credit utilization and making wise choices about how much you spend versus what you earn can positively affect your credit score.
Your credit score will go down if you use more than 30% of the total sum of all your available credit. Thus, it is essential to have a credit limit that will help you make wise utilization choices and, in turn, maintain the perfect credit score.
What are the Ways by which you can increase your credit limit?
When applying for a credit card, there are criteria that you must meet. Take care to read the terms and conditions carefully because they will outline which factors affect your chances of getting approved.
There are certain habits that may help raise your credit limit.
- For starters, it could benefit you to pay off all bills on time as well as keep your balances low whenever possible, no matter whether you use cash or cards.
- If you end up paying just the minimum balance and carrying high debt each month due to interest payments, then you should think about breaking those bad habits because they can stand in the way of increasing your credit limit.
So here are the top 4 ways by which you can increase the credit limit on your credit card.
Apply for a New Credit Card – Applying for a new credit card that has a greater credit limit is the easiest way to take care of problems related existent to lower credit limits.
By obtaining more credit cards, your credit is spread out among a number of cards, which, provided you pay your payments on time, helps you keep a solid credit score.
The same can be said about debt. As long as you have good credit and are keeping up with all of your bills, it’s okay to occasionally go over spending limits because your debt will simply be on other accounts and thus not affect your overall rating all at once. Thus, apply for credit card and get rid of limited spending.
Request Your Existent Bank for an Increase – Getting a credit card limit increase is best achieved by combining your resources with existing cards. This way, you’re able to maximize the potential of each one independently and as one entity.
To determine your eligibility for a higher credit limit, your credit card company will review both your current account and personal financial history.
It’s advised not to apply for any new credit cards prior to requesting an increase in an existing account otherwise it may lower your score.
Request for an Increase along with valid reasons – Requesting a rise alone is insufficient. Cite the justifications for your higher eligibility. For instance, your credit cards aren’t being used much and you pay your payments on time and in full each month. Your income has also just improved.
Show Your Income Statement – As your income increases, so too can your ability to manage credit responsibly.
While it may be unnecessary and unwise to open a new credit card account before you have established a positive track record of timely payments, speaking with your financial institution about an increase in available credit may be possible if you can demonstrate that you can afford it.
Hope the above steps help you. However, it is advised that you do not faulter on your credit payments with the increase.
Apart from that if you want to know about Classic Credit Card then visit our Business category.
