Have you ever thought about how to increase your credit limit while building a healthy credit history? Today, the use of credit cards is more common than ever, and limited access to credit can:
- Lead to shortfall during an emergency
- Curb your purchasing power
- Lead to higher utilisation of credit
In order to get a high limit on your card, your creditworthiness needs to be on point. Financial institutions like banks use your credit score to assess your capacity to pay on time. Credit bureaus also rate your creditworthiness by checking your credit history, which gives every detail about how you have handled credit before. This includes repaying personal loans, home loans, or credit cards.
Using your credit card responsibly can improve your credit health significantly by improving your credit score and building a strong credit history. Smart use of your credit card can demonstrate responsible usage, and effective financial management will translate into you getting a higher credit limit on your card.
Even if you are starting from scratch in your journey with credit cards, you can improve your existing credit score by taking some responsible steps. Here is how to increase your credit card limit using your credit card.
For People with Zero or Short Credit History
In this case, you may be a student or a beginner in your career and looking to build a credit history responsibly. To ensure you steadily get an increase in your card’s limit, you must:
- Choose Your Credit Card Wisely
Assess your spending habits and financial requirements first. Entry-level credit cards are a great option as they need little documentation and have lower annual fees. They make it easier for you to repay bills on time and thus build a strong financial and credit profile.
Secured credit cards will also be a good option for you since your limit depends on the fixed deposit that you have booked. If you are using a card for daily expenses, go for a cashback or shopping card, as you can get instant discounts and other credit card deals. By choosing the right card, you can save more, pay on time, and thus increase your creditworthiness, all of which contribute to getting you a higher limit in the future.
- Managing income and expenses
Try to strike a proper balance between liquidity, savings, and monthly expenses. If you do not pay the entire bill amount by the due date, interest applies daily to the balance. This rate is quite steep and can push you into a debt trap. So, use the credit card judiciously by swiping only if you are sure you can repay the amount later.
For People With Poor Credit History/Average Score
- Assess Your History And Find Reasons For Low Credit Score
Check your credit report comprehensively and look for reasons that explain a low score, such as:
1. Delayed loan payments/ EMIs
2. Delayed credit card payments
3. High utilisation ratio of credit
4. Lack of experience with different credit types
Based on why, you can look for solutions such as:
- Setting automatic payment options to avoid missing due dates
- Reducing your use of credit cards to decrease the utilisation ratio
- Borrowing secured and secured options when you get a chance
- Be Responsible When Using Your Credit Card
Careful usage of your credit card can help you build your credit score and improve your credit history gradually. Pay your credit card bills on time, even for small purchases.
Prioritise full payment at once to reduce interest and avoid entering into a vicious cycle of debt. It is important to make timely payments on your credit card EMIs too as this helps in building a healthy credit history. A default in payment leads to a negative impact on your credit score and reflects negatively on your history.
- Use Multiple Credit Cards
Try to use multiple credit cards to manage your purchases and expenses. The use of multiple credit cards will help you keep your credit utilisation ratio low, elevate your credit score, and increase your total credit limit.
- Mitigate a Debt Trap By Using Emergency Funds
If you have an emergency fund, you can utilise it to readjust your critical expenses and mitigate any negative impact on your credit history. It can safeguard you against an unhealthy credit history, boost your creditworthiness, and increase your credit limit.
- Do Not Apply For New Credit Cards Frequently
When you apply for a new card, the issuer runs a hard inquiry to check your credit report. This indirectly impacts your score. It is important to be careful about when to apply for another credit card. So, don’t just apply without thinking about whether you will get approval or really need another card.
By now, you must know that a strong credit history is important for your financial health. Not only will it get you a higher credit limit, but it will also help you qualify for the most rewarding cards. All it takes is a little discipline on your end.
If you are looking to build a safe financial future for yourself, consider none other than the One Credit Card deals. You can track all your transactions and monitor your credit usage using the powerful One Credit Card App. To better manage your spending, you can set budget alerts and analyse your monthly transactions on this app.
You will never miss paying your bills on time, and you can convert your credit card bill payments into easy EMIs on this mobile app too. Earn 5X rewards on your top 2 spending categories and avail great offers on food, dining, entertainment, education, utility bills, and much more. Apply now and enjoy lifetime-free benefits right away
