Credit Card Limit: How to Increase It Without Harming Your Score?
Credit cards in India have seen exceptional reception from consumers owing to the digital wave and several cashless drives from the Government of India. The most notable of these drives was demonetisation, implemented on 9th November 2016. This measure prompted multiple individuals from different strata of the society to shift to cashless modes of payment, a major constituent of which was credit cards.
This revolving line of credit allows consumers to make purchases without the ensuing thought of liquid cash. However, as it is essentially a form of a loan, financial institutions employ a particular provision when lending funds called a credit card limit. Such a limit depends on one card type to another and varies from individual to individual. Parameters factored in for credit limit are income, existing obligations, credit score etc. Nevertheless, it is possible to increase the limit of credit card post-issuance.
How to increase the credit card limit?
Credit card limit signifies an amount you are allowed to spend in a particular billing period using your payment card. Even though this limit is set during issuance after a due assessment of your financial position and credit score, there are two avenues to increase the limit of credit card without affecting your credit score after issuance. These two methods are mentioned below.
- Request your credit card issuer
The foremost step is to ask your credit card issuer to increase the limit on your credit card. However, your request shall be legitimately backed with grounds to do so. One such ground is showing your income proof, which reflects that your earning over the course has risen, and implies additional room for accommodating a higher limit. On the other hand, financial institutions also consider a decline in your financial obligations as a valid ground to increase your credit card limit.
- Automatic increase in credit card limit
Alternatively, another avenue through which one can achieve an increase in the limit of credit card is when the respective financial institution itself assesses certain pertinent parameters. If they deem those assessment results as sufficient, they can increase the limit of your payment card. However, it requires your active participation to bring about that change. Certain methods that agree with financial institutions, as well as credit rating agencies in that respect, are discussed below.
- Maintain a steady payment history
As mentioned previously, credit cards are essentially loans. Ergo, financial institutions reserve room for the probability that a customer might default on his/her bill payment. When you are consistent regarding your payments, it reflects well on your credit report and also assures your card issuer about your payment credibility. There are several approaches on how to pay credit card bills efficiently and timely, such as by setting a reminder or linking your savings account for automated payments.
- Keep a low credit utilisation ratio
Most financial experts suggest maintaining a credit utilisation ratio below 30%. As the term suggests, it is the percentage of the amount you utilise from total credits availed; credit card is one such borrowing instrument. A ratio below 30% assures your card issuer that you are less credit-dependent and hence, they might consider extending the limit.
- Increase credit score
Computation of credit score is founded on certain parameters: repayment history, credit history, timely payment of bills, etc. Hence, due consideration and action on these requisites might nudge your credit score northwards. There are ways you can use your credit card to increase the score. For instance, if you are prudent about your credit card bill payments, it impacts your credit score and spurs its increase. Also, maintaining a low utilisation ratio is effective too for the purpose.
A higher credit score will also make you eligible for cards such as the Bajaj Finserv RBL Bank SuperCard. These categories of cards come with a higher credit limit and several other convenient features.
Regardless, you can consider a few methods for an automatic increase in credit limit. Additionally, if you carry a secured card, you can also increase deposits in your mortgaged account to increase the limit of credit card.