Here is How a Credit Score Can Help to Increase Your Credit Limit

Credit cards have become one of the most preferred modes of payment in recent times, especially in instances of cashless transactions. These payment cards come with a credit limit that establishes the threshold of their use. It is the highest amount that can be spent by a user with his/her payment card while making transactions within a billing cycle. For better usage of the card, it is important to know how to best utilize this available limit.

The card issuer fixes every card’s limit, and it is dependent on several factors such as an applicant’s income, repayment capacity of an individual, among others. That said users always look to consider how to increase limit of credit card and accordingly increase their purchasing power.

However, note that a higher credit limit is an obvious liability for the credit card issuer. Thus, multiple factors determine whether a user can avail a higher credit limit on their card.

Significance of credit score in increasing the card’s limit

A high credit score reflects the following aspects which serve favorably in increasing a card’s limit.

  • Credit utilization

The lower utilization ratio for the borrowed amount impacts the score positively. A good credit score indicates that one’s credit utilization ratio may have been approximately 60% of his/her approved credit limit. It will make increasing the limit easier as the cardholder will be considered to be a responsible user by the financial institution.

  • Payment history

Payment history is an important factor in calculating the total credit score, and a high credit score shows that the user had consistently made timely payments. It increases the creditworthiness of an individual, thus also helping increase the credit card limit and make higher spending. Such improved credibility also increases the chances of receiving approval for a new credit card application.

Further, unique repayment options for specific payment cards allow individuals to manage their finances more effectively and make a timely bill payment, thus impacting one’s credit score. Like, cards such as the Bajaj Finserv RBL Bank SuperCard come with a host of features including a pre-approved limit that may be converted into interest-free loans providing instant cash to the credit cardholder. The repayment worries of cardholders are also put to rest with its easy EMI options.

Advantages of increasing one’s credit card limit

Apart from allowing a user to enter into transactions accumulating in higher values, increasing the card’s limit has other benefits too.

  • A higher limit may lead to a lower credit utilization ratio, which is looked upon by card issuers favorably. Consequently, such individuals can be considered to be a responsible borrower, thus allowing him/her to obtain loans easily.
  • The user does not have to hold multiple credit cards. It thus becomes easier to track all transactions and also no extra charges can be levied for holding multiple payment cards.

Various ways to increase the credit limit

Read below to know more about ‘how to increase the limit of credit cards.’

  • Application for a new and upgraded credit card stands to increase the limit. If the previous credit card were well managed, the issuer would be amenable to grant a higher limit.
  • An increase in the limit of an existing card can also be requested.
  • The cardholder may follow up with the issuer to check for an annual increase in the credit limit.
  • Improving credit score is among the potent ways to increase credit card limit, and it is also one of the important things to note before applying for a credit card. Keeping such information in mind helps improve the chances of your credit card application approval.

While considering how to increase the limit of credit cards, it should be kept in mind that the balance payment should be done within the due time. Defaulting on payments several times has adverse effects on one’s credit score, not to mention it also hurts one’s chances to avail of a higher credit limit.

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