Having a higher credit card limit can be an effective financial option to work with when managing your spending, as well as helping you keep your credit utilisation low. It can give you more buying power, and it can help you have a safety net in case of emergencies.
In this blog, we are looking at the top ways you can address to get an increased credit card limit.
1. Stay on top of your payment history
In your financial past, especially coming from major credit card issuers, they all have a series of requirements and measures of key determinations if you are eligible for a credit limit increase, but payment history is the largest. The issuers look considerably at payment history as they verify you are handling credit well and that you can manage larger amounts of borrowings.
To maintain a good payment history, it is important to make your payment on time every month. If you can’t pay off the whole balance, then paying off at least the minimum would be good because that is positive proof that you can manage debt.
So, by having a good payment history, you can show that you are focusing on managing your debt efficiently, and it will help to establish that you are a good candidate for a credit limit increase, which will increase your chances of getting approval for a new, higher credit limit.
2. Improve Your Income and Employment Stability
The credit card issuer will look at your income and employment when determining to approve a credit limit increase. Ultimately, income is a good indicator of repayment ability for credit issuers, and the more income you have, the more likely repayment will occur.
Having your income up to date is important whenever you want to increase your credit limit, and some cardholders forget about updating their income. If your income situation has changed, it is beneficial to report the change, and the information may bolster your request for a credit limit increase.
For freelancers/business owners with fluctuating income, it is nonetheless important to show that your income is either always consistent or increasing steadily. Generally, lenders are apt to approve the request if they can see you can afford the higher credit limit.
3. Decrease Your Credit Utilization Ratio
Another important factor in evaluating your creditworthiness is how much available credit you are using. Your utilisation ratio is the percentage of available credit you are using, and understanding its impact on your credit scoring is key to lowering the risk you portray to credit card issuers and getting an increase in credit limit.
If you are frequently using a large portion of your total available credit, issuers may view you with heightened concern before extending more credit to you because they may think you depend too heavily on credit. To lower your utilization ratio, try and pay-off your balances off every month and avoid maxing credit cards altogether. A good rule of thumb is to be below 30% on your utilization ratio to have a healthy enough level of risk reduction demonstrating to creditors.
If your utilization ratio is high, and you are looking for a limit increase, pay down some of your balances before you ask for your increase. By paying down your remaining balances, you are lowering your credit utilization ratio and may convince your issuer to grant your requested increase.
4. New Credit Cards Will Add New Value
Think Kiwi One way to expand your various types of credit is to add a new credit card. Adding a new credit card automatically adds to your total available credit. You’ll most likely improve your credit utilization ratio, and it adds to your credit mix, helping improve your credit score over time.
When adding a new credit card, you will want to focus on the features that support your spending habits and financial goals. For example, the Kiwi Credit Card offers an all-digital RuPay credit card with UPI payment capabilities. If you are looking for a safe and efficient way to transact, a Kiwi Credit Card is an attractive option. You get new digital features, such as zero foreign transaction fees and significant security checks, on top of their rewards program.
Raising the credit limit on your credit card has many benefits, including positively impacting your credit score and providing you with better flexibility with your finances.
