When you apply for a credit card, you usually won’t know what your credit limit is going to be, even though the credit provider might give you an insight into what the limit usually is for new customers. This can be a real problem for some people. For instance, you might want to transfer your existing balance so that you can try a new deal, but your credit limit might be too small for you to do so.
If you have a credit card, or you’re currently using your overdraft on your current account, but you want to know how you can improve the amount of credit you can borrow, then this might be the article for you. A lot of people wonder about increasing their credit card limit from time to time. Here, we’ll cover what you can do to start increasing your limit, and even more importantly, whether you should be considering doing it in the first place.
Increasing your Credit Limit
The good news for people who aren’t happy with their current credit card, or overdraft limit is that it is possible to request a higher limit from your credit provider. However, it’s generally a good idea to wait for several months before you do this, so that your lender can see that you’re a sensible customer that can be trusted to pay back the money that you borrow on time. However, if you exceed the limit on your card and miss payments, the chances are that your credit provider won’t agree to increase your limit. What’s more, you will also have a dangerous impact on your credit history which could prevent you from getting a better deal elsewhere.
A good thing to keep in mind is that when you want your lender to increase the amount of credit they give you access to, you’ll need to prove that you are very creditworthy. You won’t be given a higher limit if it seems as though you’re likely to default on your debts, or you won’t be able to repay the amount that you owe in full. Lenders will decide whether you are a suitable customer by looking at your credit record and taking out credit score checks alongside other checks.
Before you take steps to increase the amount that you’re allowed to borrow, you should think about a number of different factors that might help you to decide whether increasing your limit is actually a good idea for your specific circumstances.
What to Remember When Increasing your Limit
The first thing you’ll need to remember when you’re thinking of increasing your credit limit is that you shouldn’t try to increase your debt without the authorization of your credit provider. However, some banks and societies will allow you to pay out more than your limit, though there are usually very high fees for doing this, that can end up having an impact on your credit rating.
It’s worth taking the time to think carefully about why you want to increase the amount that you’re allowed to borrow in the first place. Although there might be some sensible reasons for your choice, there could be signs that you aren’t handling your debt as well as you should be. A good reason for increasing your credit limit might be because you use your credit card to pay for business expenses before you claim them back. If your expenses became suddenly greater, you’d need to improve the amount you can borrow to reduce problems with cash flow.
On the other hand, some people may want to increase their credit limit because they’re having problems when it comes to meeting their expenses on a regular basis. If this is the reason that you want to increase your limit, then you should think carefully about your finances and what you can do to improve your spending habits. Increasing your limit is likely to only make the problem worse.
If you’re having problems with the way that you spend money, then you’ll need to act quickly to make sure that you don’t get into an amount of debt that you simply can’t pay off.
Stay Away from High Cost Lending
if you aren’t able to increase the amount of credit you can access, then you might end up turning to expensive options for short-term lending instead. However, the truth is that borrowing at a high rate is often very dangerous and it can worsen the problems that you’re facing with your money.
Even if you aren’t risking taking on a lot of debt, upgrading your limit in credit might not be a good idea. A high credit limit can increase the temptation you feel to take on more debt than you would otherwise, and it might stop you from qualifying from important credit later on, like credit for a mortgage. This is because many lenders look at the amount of credit you have access to when they are deciding whether they should lend to you.