The credit card limit is the upper limit that the cardholder can utilise to make payments. Banks fix this limit based on myriad factors. First-time credit card users are normally allocated a low credit limit because they don’t have records that a bank can track to know how they manage their debts.
The bank can consider increasing the credit limit on your card after reviewing how responsibly you have managed the credit bills. If a cardholder pays the credit card bills on time, it can increase your card limit and will inform you about the increase.
If a cardholder needs to bear a large expense, they can request the bank to increase the credit card limit. You can convince the bank by presenting your income documents. The bank will consider increasing your credit card limit against a minimal or no fee.
Here are the ideas that can help a cardholder increase the credit limit on cards.
Ways to increase the credit limit on a Credit Card
- Maintain high CIBIL score
A credit score is assigned to individuals by the credit bureaus based on their credit history. It ranges between 300 (lowest) – 900 (highest) in India. Banks consider your credit score, and the credit limit on a card largely depends on the credit score. The better the credit score, the higher the credit limit can be assigned. Thus, it can be said that the primary key to increasing your Credit Card limit is a higher credit score, as it determines the credit worthiness that a bank relies on. Ensure that you do not miss paying any of your monthly installments. You need to concentrate on boosting your CIBIL score using the Credit Card. You can use it for grocery shopping, paying monthly fees, dining bills, etc. Pay your monthly bills using a credit card on time. It will show that you are using your card often and that you need a higher limit on your credit card.
- Reduce your financial obligations
If you are paying for an existing home loan, personal loan, or any other loan, it is the point for you. When you require an increase in your credit card limit, the banks check the debts you already have. It can be credit card bills, loan EMIs, etc. If it finds too many financial obligations, they will want you to first reduce them before requesting an increase in credit limit.
- Repay dues on time
The cardholders need to persuade banks to increase their credit limit. The foremost action to do so is to pay off the credit dues fully and before the due date. Ensure that you do not have any pending issues; if you have some pending dues from the previous bills that are carried forward, clear that as soon as possible. Timely repayments show that the individual can handle your debts.
- Apply for a new card
You can apply for a new card or accept a card offered to you with a higher limit. However, it does not mean you must utilise all the new card’s credit limit cards. If you manage your cards in a disciplined manner, soon, you will get credit card with a higher credit limit. You need not apply for many cards at a time. It will decline your credit score as it is a red flag for credit bureaus.
- Keep the Credit Utilisation Ratio low
Banks consider the Credit Utilisation Ratio to evaluate an individual’s credit limit against the maximum credit limit granted to them. It is suggested to keep this ratio low. You should pay a maximum of 30% of the granted limit. This would help you in two ways. First, it shows the bank that you do not have huge expenses to manage every month. Second, it will boost your credit score. This way, you can make banks consider increasing your credit limit on your card.
- Present increased income or another source of income
Banks need to check the clients’ earning potential. It helps them understand how to repay the dues on time and then fix the credit limit. If you are enjoying a salary hike or have an alternative way to earn and increase your income, you can show it to the bank. It will support your request to increase the credit limit.
A bank can offer you a wide range of credit cards depending on your purchase inclinations. You can choose based on your buying preferences. With the right credit card, you will be able to earn with each spend on your card. It can be a reward centred card for entertainment, shopping, dining, travelling, etc. All these ways will help you to increase your credit card limit. Just make sure to be prudent while using credit cards, as you need to be disciplined while maintaining a low credit utilisation ratio.