Benefits of increase your credit limit – Your credit limit is a handy tool that helps your financial growth. Getting a bigger credit limit can lead to being able you borrow large amounts of money.
Outside that, it can also give your credit score a major boost, however, this depends on how well you make good use of the benefits it brings.
However, you should note that a credit limit is not determined by credit score. If you want to know more about this, you have to keep reading.
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Benefit of Increase your Credit Limit
Increasing your credit limit, will not negatively affect your credit score, but it will improve it. Well, the benefit of having an increased credit limit cannot be overemphasized.
A credit limit is the maximum amount of money that people can borrow from their banks using their credit cards. Here are listed benefits you can get from increasing your credit limit:
Reduced Credit Utilization
As a cardholder, when you increase your credit limit, your expenses are likely to reduce as well. You may think it does work that way but it does. Credit utilization is one of the key criteria or requirements for reporting agencies like Equifax and Transunion to use to calculate your credit score.
However, credit utilization is calculated by dividing your outstanding debt by your present credit. Hence, the lower the credit used, the higher your credit score will be.
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Easier to Get Loans
The credit limit is the maximum amount that people can loan from their banks using their credit cards. This limit is set up by your bank on factors such as the income of the cardholder, credit score monthly, and more. Your increased credit can prove to your bank that you can be trusted with their money to pay back in due time.
Increase the Credit Score
With a high credit limit, you can be accessible to flexible spending. In other words, you can use your card to make larger purchases without bumping up against your credit limit. Hence, an increased credit limit allows you to improve your credit utilization.
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Credit cards by nature are very important and favourable to customers who spend and pay back regularly when their charges are due to pay back. Well, with a higher credit limit, you can be able to access better rewards your bank has to offer.
Is it Beneficial to Increase your Credit Limit?
Yes. Having a higher credit limit will help your credit score. This is because it will reduce your credit utilization as long as how much you owe remains constant or goes down. However, if increasing your credit limit would make you run into debt, it is advisable you abstain from it.
What Should my Credit Limit Be?
What is a good credit limit on a card? For you to have a good credit limit, you have to beat your credit limit above 30%. However, in other, for your credit limit to be this high you typically need an excellent credit score. Hence, you have to note the fact, that what qualifies a person for a good credit limit varies.
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Will Increasing my Credit Limit Affect my Mortgage Application?
No. a high credit limit can not affect your mortgage application. The higher your credit limit, the more likely you are to be approved for a mortgage. As we mentioned before, your credit limit can have a good effect on your credit score. Most lenders allow some flexibility depending on your credit score.
Why Did My Credit Limit Increase Automatically?
Well, an increase in your credit limit is a sign of consistent payment history. Hence, if you have kept a debt balance low in addition to making on-time payments, you will have a credit score improvement and also a credit limit increase.
Having a consistent payment history will help your credit score. This is very necessary because most creditors will review your credit, income, and payment history regularly moving forward.
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How to Increase Credit Limit
There is a different method you can use to increase your credit limit. Some of these are that you can do that by calling the customer service number on the back of your card. In so doing, you will be able to seek the help of your bank for an increase in your credit score.
Furthermore, you can increase your credit limit by consistent payments shown in your credit history. Moreso, you can also increase your credit limit by going to your bank to carry out that pelage.
What is a Good Credit Limit?
A good credit limit is above 30%, as that is the average credit card limit. However, to get a credit limit this high, you need an excellent credit score, a high income, and little to no existing debt. Furthermore, you will need to meet with your bank manager for a proper explanation of what type of credit limit you should have. This is because what qualifies as a credit limit for everyone varies.
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