Benefits of Increasing Your Credit Limit. If you have a credit card, then you will know what a credit limit is. This is why it is very important for you to determine or ask for your credit limit before applying for a particular credit card. Your credit limit can go a long way to either helping you build your credit score or lowering it.
That being said, there are more benefits to increasing your credit limit than not. Therefore, in this article today, we are going to be considering the benefits of increasing your credit limit.
Anyone who wants to increase their credit limit before doing so should read this article. because we are considering the benefit of increasing your credit limit so that you can decide for yourself if you are doing the right thing or not. We are also going to take a look at how to increase your credit limit in this article.
Benefits of Increasing Your Credit Limit
Increasing your credit limit will do you more good than harm if you are a responsible credit card user. If you are not, then it is definitely going to do more harm than good. But if you decide to take the post, then you are definitely going to get more benefits from increasing your credit card limit. Without further ado, below are the benefits of increasing your credit card limit:
Increasing your credit limit lowers your credit utilization.
One of the best benefits of having your credit card limit increased is that it will indirectly reduce your credit utilisation ratio. Your credit utilisation ratio is one of the factors that is considered when determining your credit score. If it is high or too high, it affects your credit score by reducing it. However, if it is low, it increases your credit score.
It increases your credit score
If you increase your credit limit but you did not increase your expenses, then you will end up using less credit than the limit that was assigned to you. This will directly increase your credit score because there will be a decrease in the amount of debt that you owe. One of the things that financial institutions will look at more closely before giving out loans is when people use a lower amount than their credit limit.
Therefore, if you increase your credit limit and do not use up to the amount, it affects your credit score positively, which is loved by financial organisations.
Makes it easier and cheaper to get loans and additional credit
Anybody that has a high credit score has a better chance of getting loans in the future and more options to get approved for credit cards than a person who has a low credit limit. Having a high credit score increases your chances of getting loans with low rates. The reason for this is that your credit score determines whether you will be offered a loan with a high-interest rate or a low-interest rate.
Increasing your credit limit eliminates the need for multiple credit cards
If you have a high credit limit on your credit card, it basically eliminates the need for you to get multiple credit cards to have enough credit. Since your credit limit is already high enough, you will not need another credit card if you want more credit.
Having a high credit limit on your credit card means that you have customer protection with your credit card company. What this means is that you can use your credit card to make last-minute purchases and earn rewards for them. We also have access to price protection, extended warranties, coverage for lost goods, and more.
Help in an emergency
When it comes to a case where there is an emergency, if you have a large enough credit limit, it will give you access to tackle emergency funds. It will simply eliminate the need to look for the best emergency loans to take out when you have an increased credit limit.
How to Increase Your Credit Limit
These are some of the best benefits of having your credit card limit increased. Although these are not all, for the sake of this article, we have decided to bring to you some of the best ones. That being said, you have seen that it is a good thing to increase your credit limit. Let’s take a look at how to do so.
Increasing your credit limit can be done in two ways. The first method is to simply request a credit increase using the website of your credit card issuer. All you need to do is simply sign in to your account and look for the option to increase your credit limit and request it.
If you want to go directly, you can also decide to give call your credit card issuing company. After contacting them, tell them that you have a strong credit card history and it is time for you to increase the limit on the card. They would, of course, decide whether to give you a credit limit or not, but if you have a spotless record, you are definitely going to get it.
The Benefits of Increasing Your Credit Limit FAQs
Is it beneficial to increase your credit limit?
The simple answer to this question is yes, it is very beneficial to increase your credit limit. There are so many benefits of increasing your credit limit, like increasing your credit score and reducing your credit utilisation ratio. It also gives you access to loans with low-interest rates and also emergency loans if you want. Just read this article for the full brief on the benefits of increasing your credit limit.
Do you build credit faster with higher limits?
Once again, the question requires a yes for an answer. The higher your credit limit, the faster you build your credit score. This is because when your credit limit goes up and your balance stays the same, it instantly lowers your credit utilisation ratio. When your credit utilisation ratio is low, your credit score is automatically boosted.
Is there a downside to increasing your credit limit?
There is a very big downside to increasing your credit limit which is because it can lead to you owing more debt. This is because when you get approved for a larger credit line you are definitely going to be spending more which can lead you to go deeper into debt.