Wishing that you had more credit to buy the things you really want? Wishing you had the security of some funds at your disposal in case of an emergency? Either way, there are a few things that you can do to increase your credit limit and make it these happen.
When you are trusted with more credit, it’s important to be responsible when making a credit card payment online. Always avoid splurging on unnecessary impulse buys, which can be so easy to do at times!
If you’re interested in raising your available credit, you’ve come to the right place.
Here are steps you can take to increase your credit card limit –
1. Speak To Your Credit Card Company
If you’re interested in increasing your credit score, the first thing you should try doing is contacting your credit card company.
Speaking to them will give you insight into whether or not you are already eligible for a credit limit increase. If you’ve already been making regular payments towards your credit balance, chances are good that you may already have earned your credit card company’s trust.
When discussing your requirement for an improved credit limit, discuss why you feel you need the funds and your current financial situation.
Having reasonable expectations and an open conversation can be surprisingly effective for getting your limit increased.
If this doesn’t work, it is likely that you may have to work on your credit score before you can avail more credit.
2. Build Your CIBIL Score
The best way to improve your CIBIL score is to manage your finances responsibly. Late payments, credit overutilisation, and multiple credit rejections are all ways that your credit score gets damaged. These are red flags for your credit company that providing you with a loan may be risky.
“To contract new debts is not the way to pay old ones.”
-George Washington
To try and improve your score, the best thing you can do is make timely repayments and close out any pending loans that you might have. Avoid taking out loans that you don’t require, and manage your credit cards responsibly. Over time, there’s a great chance that your limit will be increased.
If you have a good CIBIL score but still find it difficult to avail of additional credit, it could be due to how much credit you’ve already made use of making purchases.
3. Work On Your Credit Utilisation
Banks and other financial institutions use something called credit utilisation to understand how much of your sanctioned credit you’re using. If you regularly max out your credit cards, it’s a sign that you may already be under financial stress, in which case the lenders may feel that your profile is higher risk.
“When prosperity comes, do not use all of it.”
– Confucius
Whereas if the amount of credit you utilise is on the lower side, banks are more likely to lend to you. Not using all of your sanctioned credit and clearing your dues regularly are great ways to signal to your lenders that you are responsibly using your debt and repaying it on time. When you do this, banks are more likely to reward your responsible credit usage by raising your credit limit.
If this doesn’t work, you may have to try increasing your credit limit by opting for a secured credit card or increasing the deposit on your existing FD-backed credit card.
4. Increase Security Deposit
A secured credit card is one that is backed by a deposit such as a fixed deposit (FD).
In case you’ve opted for a secured credit card backed by a fixed deposit, you can call your credit card company to inquire about the steps you can take to increase the deposit.
Once you’ve increased your fixed deposit amount, you should be able to utilise most of this amount as a credit line (as per your credit card company’s policies).
“Money is a terrible master but an excellent servant.”
– P.T. Barnum
Increasing your fixed deposit amount is one of the fastest and easiest ways to avail a bigger credit limit, but it involves you needing to deposit money first.
If this isn’t an option for you, you may need to look into getting another credit card.
5. Obtain Additional Credit Cards
Is your credit card company not willing to increase your credit limit? It could be because of the policies that restrict them from doing so. However, this doesn’t mean that you can’t apply for credit cards from other companies.
Different credit cards come with different benefits, like airport lounge access, frequent flyer miles, and cashback. When choosing your new credit card, try to think about how you can get the most out of your available offers.
Remember the discussion above about credit utilisation. When your credit report is accessed for your application, the new company will be able to view how much you’ve utilised your already sanctioned limit.
If you’ve been reasonable with your usage and not maxed out all your existing credit lines, it shouldn’t be too hard to get a credit card from an alternative bank or financial institution.
“Beware of little expenses; a small leak will sink a great ship.”
– Benjamin Franklin
You must keep in mind that more credit comes with more responsibility to repay. While the bank may sanction your new credit card, defaulting on even one of your credit cards could negatively impact all of your other ones. To avoid this, make sure that there are no weak links when it comes to your credit.
Conclusion
Speaking to your bank, building your credit score, and increasing your FD amount are some of the best ways how to increase credit card limit.
Remember, with a higher credit limit comes more responsibility. While the bank may grant you an increase in credit limit, ensure that you can maintain it by repaying on time.
Increasing your credit limit can be extremely helpful because it allows you to have more money at your disposal in case of emergencies. However, if you fail to make the repayments, it could severely affect your credit score and cause your limit to drop again.