HomePersonal Finance NewsFollow these practical steps to increase your credit card limit

Follow these practical steps to increase your credit card limit

Increasing your credit card limit will boost your ability to access instant credit limit and even help in improving your credit score through reduced credit utilisation ratio.

By Naveen Kukreja  February 18, 2020, 6:27:54 AM IST (Updated)

 Increasing your credit card limit comes with a host of benefits. It increases your ability to access instant credit limit and even help in improving your credit score through reduced credit utilisation ratio. It can also get you a bigger ‘loan against credit card’ for meeting financial shortfalls or exigencies.

If you too are contemplating to increase your credit limit, here is how you can go about it:

Improve your credit score

Your credit score is a three-digit numerical representation of your creditworthiness. Credit bureaus calculate credit score on the basis of your past debt repayment. A credit score of 750 and above are considered as ‘good’ by banks and other financial institutions. Those with lower credit scores usually have a history of poor debt management. As credit card limit is nothing but a pre-sanctioned line of credit, card issuers usually desist from increasing the credit limit of those having a low credit score.

The first step towards increasing your credit limit is to improve or maintain your credit score. The best way to do so is to fetch your credit report from credit bureaus or financial marketplaces at regular intervals. Doing so will allow you to take corrective steps to improve your credit score and thereby clear one of the crucial eligibility criteria used by banks for evaluating candidates for credit limit increase.

To steadily improve your credit score, ensure you repay EMIs and credit card bills by the due date, avoid multiple loan or credit card applications within a short span and maintain your credit utilisation ratio within 30 percent.

Wait for credit limit enhancement offer

Most banks usually extend pre-approved credit limit increase offers to credit cardholders on the basis of their internal risk policy. Eligible customers are informed about their credit limit increase offer through e-mail, SMS and net-banking login. Cardholder wishing to accept the offer can do so by replying to the SMS or e-mail or by accepting it through their internet banking or mobile banking app. The approval is usually instant and does not require any additional documentation.

Request credit limit increase by yourself

Credit cardholders can also approach existing banks for increasing their credit card limit. Card issuers evaluate eligibility on the basis of your past repayment history, monthly income, present employer, credit score, etc. For example, your credit card issuer might be unaware of the increase in your income and may still be offering credit limit on the basis of your past income data. In this scenario, you can approach your bank to increase the limit available on your card and submit the latest income proof for pushing your case. If the bank is convinced, it will accept your request for credit limit enhancement.

Apply for a new credit card

Apply for a new credit card in case your existing card issuer refuses to increase your credit limit. However, before applying for a new card, make sure to fetch your credit report from credit bureaus or online financial marketplaces. Those with a credit score of 750 and above have higher chances of new credit card approval. Remember that card issuers consider your monthly income, employer profile and job profile while evaluating card application.

Naveen Kukreja is the CEO and Co-founder of Paisabazaar.com.