How to Ask For a Credit Limit Increase
All credit cards come with a credit limit on them. In some cases, this limit is low and on some cards, it is high. The limit on a credit card is decided by considering various factors, including the income of the cardholder, their credit history, credit behavior, credit score, etc.
If you do not yet know what a credit card limit is, then let me tell you that it is the maximum amount that the credit card issuer authorizes the card member to use every month. When you get your credit card statement every month, you will find your credit limit among the many numbers on it. This is your credit card limit.
The height of your credit card ceiling is not in your control. The credit card issuer sets it when you get the card. Even though, you do not get to decide how much limit you can get on your credit card, you can influence it by following the right practices.
Ups And Downs
Credit card issuers can lower or raise the credit card limit at their own discretion, as there are no laws that prevent issuers from doing so. As a cardholder, the only right that you have got regarding credit limits is that you can avoid the over-limit fees. This fee is the one that you have to give when you go over and spend more than your assigned credit card limit. If you avoid this, then you do not have to pay over-limit fees on your credit card.
Most of the credit card issuers automatically increase the credit limit of a card member after a few months of seeing their responsible repayment and borrowing behavior. However, you can also request and ask them for a credit limit on your own. You just need to ensure that your credit card is not brand new; otherwise your request will get ignored, unless you have shown a nice borrowing behavior.
Have the right reasons
Before you call your credit card issuer to ask for a credit limit increase on your credit card, you must know why you want a higher credit limit. One of the best reasons to say is that you want to boost your CIBIL score.
Your CIBIL score can increase with a higher credit limit, as then your credit utilization ratio can decrease substantially. This ratio is the percentage of the credit that is available against the one you are using. The credit utilization takes a big part (nearly 30%) of your CIBIL score.
So, it is wise to keep your expenditure far below 30% of your credit limit, since the highest CIBIL scores are of those people who spend below 10% of their credit limit. The higher your credit utilization ratio is, the more you need to either raise your credit limit or cut your expenditure on your credit card.
Ask for a credit limit increase
At the back of your credit card, there is the 800 number, which you can dial in order to ask for a credit limit increase on your card. When you will call the customer care representative, they will ask you a few questions. They may ask you whether your financial state is different now than earlier, how many years you have resided in your current home, how long have you been working in your current job, etc.
If you answer all these questions correctly and the customer care representative feels that an increase in your credit limit will prove to be good for you, then it is more likely that they will give you a higher credit limit.
However, before you go for it, ask how the increase will affect your credit account, such as whether it will change your minimum payment, interest rate, etc. Know all the details and then only continue with the credit limit increase application.
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