The credit limit is the highest amount the credit card issuer will lend a credit card holder. It’s the maximum amount you can charge on your card.
Your credit limit will significantly impact your credit score due to your credit utilisation ratio. The ratio is computed by dividing the total sum due by your credit limit. This figure represents the portion of your available credit that you are now using. Your credit score often improves with an increased credit card limit.
You are a risk-free candidate if your credit limit rises, but your balance stays the same. That means you use less of your available credit. This fact raises your credit score.
Is It Possible to Automatically Increase Credit Card Limits
Issuers will occasionally automatically increase credit card holders’ credit limits when cardholders are in good standing. You may discover that your credit limit has increased without your authorisation. This regular occurrence will most likely benefit you rather than harm you.
Credit card companies commonly increase the credit limits of cardholders who use their cards regularly and pay their bills on time. There are a few explanations why your credit card company might have increased your limit:
- You have consistently made your payments on schedule.
- You mentioned a rise in income.
- You’ve possessed a card for a very long time.
Each credit card issuer has established rules for when a credit limit will automatically increase. You will have more freedom to use your credit card if it occurs to you. You’ll most likely improve your credit score if you maintain your current balances.
How Do Lenders Set Your Credit Card Limit?
Your lender decides your credit limit when you apply for a credit card. Several factors are taken into consideration to do this. These consist of:
- Your yearly salary
- Your age
- The debt you are presently in
- Your current job title
The following elements have the most impact on your credit limit:
- History of your credit
- Your credit rating.
Your credit card will likely have a low credit limit if it’s your first credit card. It may also happen if you don’t have any credit history. This is because the lender isn’t sure whether to take a chance on you or not.
A low credit limit doesn’t last for a very long time. Consider this a positive thing. The lender will give you a choice to raise your card’s credit limit if you use it frequently. Pay your bills in whole and on time to get this opportunity.
The Best Way To Raise Credit Card Limits:
Use Your Credit Card
The lender will automatically increase your card’s credit limit if you use it frequently and make on-time bill payments.
Provide Your Income Statement
You can continue using your old credit card even when your salary has increased. Go to the lender with your most recent pay stubs and request an upgrade to your credit card. Also, ask to increase your credit limit.
Request To Increase Credit Limit
Most lenders will boost your card limit if you ask them to. It depends on the justification you gave for the request. Go to the lender’s branch or submit a request online to raise the limit.
Apply For A New Card
You can also think about requesting a new credit card with a higher credit limit. It is not difficult for you to get approval for a credit card with a greater credit limit. You must have been paying your current credit card bills on time.
Pay Your Bills On Time
Your credit score may rise if you pay your credit card payments consistently and on time. Then the lender will view you as a trustworthy cardholder. Lenders frequently increase your credit card limit as a result. You may also get a lifetime free credit card if you maintain the described factors.