How do you increase your credit limit?

How do you increase your credit limit?

If you have a credit card or overdraft but want to increase your credit limit, how can you go about it? This guide looks at what you can do to increase your limit and, more importantly, whether or not you should.

What is a credit limit?

This is the maximum amount you can spend up to on a credit card or overdraft.

When you apply for a credit card, you won’t usually know what the credit limit will be, although you might be told the maximum for new customers.

Often, you will only be notified of your actual credit limit when you receive your new card.

That can be a real problem in some cases.

For example, if you want to transfer an existing balance, to take advantage of a 0% deal, but your new credit limit is too small to do so, you might be disappointed.

If this matters, ask the card provider before you apply, and before you sign the credit agreement.

The card provider should be able to give you an idea of how much you are likely to be offered, although they might need to do a credit check first, to make sure that you’re eligible and can afford to repay that amount.

If you’re shopping around and not yet ready to apply, make that clear so a mark isn’t left on your credit file.

Increasing your credit limit

If you aren’t happy with your credit limit, you can request a higher limit from the credit card provider.

However, it is a good idea to wait for several months first so that the lender can see that you’re a sensible customer.

Of course, if you exceed your existing limit on your card or miss any payments, your card provider is unlikely to agree.

Not only that, but you’ll damage your credit rating, which might stop you getting a better credit deal elsewhere.

The card provider might offer you a higher credit limit, once you’ve been with them for a while.

You don’t have to accept this – you can reject the proposed increase (or ask for a smaller increase), and you can also make it clear that you don’t want to be offered any future increases – for example, because you’re worried you might be tempted to overspend.

If you decide you don’t want an increase, let the card provider know – they should make it easy for you to opt out.

How to improve your credit score

If you want your lender to increase the amount you can borrow, you need to be as creditworthy as possible.

They won’t give you a higher limit if they think you can’t afford it or are likely to default.

Lenders usually decide whether or not you’re a suitable customer by looking at your credit reference file, as well as making other checks.

They will take into account how well you’ve managed your existing credit commitments.

But before you take any steps to increase the amount you can borrow, you need to be sure it’s right for you.

Increasing your credit limit – Can you afford it?

Whenever you’re considering increasing your debt, it’s essential you work out a repayment plan that you can afford first.

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Source:- moneyadviceservice