Ways to Increase Your Credit Limit

In today’s time, getting access to money has become a matter of just a few taps.

Whether you want to buy a new bike or have any unexpected expenses, all you need is an active credit card or a credit line to take care of it.   

Just submit information like your name, PAN, and income details based on which your credit worthiness will be determined, and you’ll be approved for a credit limit.  

Your credit limit depends on factors like your monthly income, repayment history, credit utilization, etc.

But if you’re unhappy with the limit you’re approved for, there are ways to increase it. Read this blog to find out 5 such techniques in which you can increase your credit limit instantly.

Some Factors that Determine Your Credit Worthiness: 

1. Credit Score:

Your credit score is a three-digit number that is a numeric representation of your credit behaviour. This is the first thing that the lender will check before giving you a loan offer.  

Read More: What is the Minimum CIBIL Score for Personal Loan

2. Repayment History:

The credit bureau records the repayments you make across all your personal loans and credit cards. This record also contains information about your missed and late repayments

3. Monthly Income:

Your monthly income helps with risk calculation to determine the disposal income that you can use to repay the existing and new debts. 

4. Credit Utilization:

Your credit utilization is the percentage of the total credit limit that you use. When using credit cards, the best practice is to keep your credit utilization below 30%

5. Credit Age: 

This is the length of time you have been accessing credit. A longer credit age gives more insights to the lender to assess your profile and understand your past credit behaviour to give you an offer.   

Be it a personal loan or credit card, your lender will carefully assess these factors before offering you a certain limit. If you’re unhappy with the amount you’re offered, you can always apply for a higher limit.

Benefits of Applying for an Increased Credit Limit

1. Stronger Financial Back Up During Emergencies 

Even if you don’t need an increased limit, it can serve you as an emergency fund. There is always peace of mind in knowing that you have instant access to money for any unforeseen times.  

2. Increased Access to Funds 

An increased access to money means more flexibility in managing your expenses or purchasing things you have been delaying due to lack of funds.  

3. Lower Credit Utilization 

If you apply for a higher limit on your credit card while maintaining the same expenses, you will reduce your utilization. This is seen has a healthy credit behaviour among lenders which can help you increase your credit score.  

4. Attractive Rewards  

If you’re a credit card holder with a higher limit, then you can spend more using your card. Repaying all your credit bills on time allows you to access higher rewards for purchasing flight tickets, gifts, etc.  

5 Simple Ways in Which You can Increase Your Credit Limit

1. Keep Using Your Credit Limit Actively 

If you want to increase your credit limit, then it is important to show good credit behaviour and develop trust with your lender.  The first step towards this is being an active user of the credit card or line.  

Make sure you are making all your repayments on time. This will build trust with your lender and show more creditworthiness. When you apply for a higher limit after being an active user over a long period of time, it provides more data to the lender to evaluate your profile for a higher credit limit. 

2. Make Sure You’re Following All the Good Practices of Using Your Credit Limit 

While it is important to use your credit limit actively to develop trust with your lender, it’s more important to follow the good practices of using your credit line or card.  

Follow these steps to use your limit responsibly and increase your chances of getting a higher limit with your current lender:  

– Pay All Your EMIs on Time: This is the first thing your lender will check while evaluating you for a higher credit limit. It is crucial to ensure that you’re not defaulting on your repayments and are showing a positive repayment history.  

– Maintain a Credit Utilization of 30-40%: If you’re using a credit card, then it is important to limit your utilization to 30-40%. Usage above that can indicate credit hungriness which can have a negative impact on your credit profile.  

– Pay More than the Minimum EMI Amount Every Month: Make sure you’re paying more than the minimum amount on your statement, every month. This way you can avoid falling into a debt trap and become a more responsible borrower.  

3. Provide More Information to Your Lender  

If you want access to more money, you can always request your lender for a higher credit limit.  

You might have to back your request with additional information like your bank statement, income proof, or reason for requirement to increase your chances of approval.  

4. Work on Improving Your Credit Score  

If you’re unable to get an increased limit even after requesting your lender, start working on improving your credit profile. A high credit score, good repayment history, and low credit utilization are some green flags they look for.  

Doing this will automatically increase your chances of getting a higher limit.  

Read More: How to Improve Cibil Score?

5. Apply for a New Credit Limit or Credit Card  

Different lenders have different eligibility criteria based on which they offer you a credit limit. If you’re unhappy with the credit limit you currently have, you can always apply for a personal loan or credit card with a different bank or NBFC. 

Read More: What is NBFC? What is the difference between Bank and NBFC?

Zype is a loan app that offers loans up to Rs 5 lakhs with an easy application process. All you need is your PAN and to be salaried to get an approval within 30 seconds.