Want a higher credit limit? Here’s how to do it without damaging your credit score | Mint

If you are a credit card holder then proper credit management is extremely crucial for you. It will help you in maintaining a healthy financial history. Further, one way to raise your credit score is by raising your credit limit. Still, you should aim to do it without damaging your credit score.

To put it simply, your credit score is nothing but your credit profile. As soon as you opt for a credit card based on your credit score it becomes a part of your identity. How you repay your loans and make consistent repayments speaks a lot about your character. Your credit score hence is nothing but a certificate of your integrity and character. That is why increasing your credit limit without harming your credit score is extremely important.

Understanding credit limit increases

A credit limit increase is a fair way to lower your credit utilisation ratio, which is 30% of your credit score. Suppose you have a credit card with the limit of ₹50,000 and the outstanding amount is ₹20,000. Now increasing the limit to ₹100,000 lowers your credit utilisation ratio from 40% to 20%, thus increasing your credit score.

How to request for a credit limit increase?

• Check eligibility: Ensure that your income level has increased and your credit score is consistent and in great shape. Do not request a raise if you recently missed payments or have extremely high credit utilisation ratio.
• Talk to your issuer: Your issuer will increase your credit limit automatically if you request them to in their application, website, or phone customer service. Be ready to provide them with new income details.
• Request inquiry type: Ask them clearly if the issuer will perform a hard or soft credit inquiry. A hard inquiry drops your score temporarily, but a soft one won’t harm it. Hence, you need to be aware of the upcoming steps so that you are in a position to make informed decisions.

How to avoid harming your credit score?

• Don’t overspend: Keep an eye on your spending so your credit utilisation ratio is low. Higher limits don’t necessarily mean higher debt. Here focus needs to be on keeping your credit utilisation ratio in check and as low as possible.
• Check your credit report: Ensure your report is free from errors and will not affect your credit score. You need to ensure that your credit report is clean, consistent and represents a healthy credit profile. If there are discrepancies, promptly reach out to your credit bureau and settle issues.
• Use credit responsibly: Pay on time consistently and keep credit inquiries to a minimum. You should remember that credit is nothing but borrowing from the future. That is why always be responsible in your spending of funds.

Therefore, you should focus on increasing your credit limit judiciously to increase your credit score, by following the correct methods.

By doing all these and being a responsible credit user, all reasonable credit card consumers can enhance their financial well-being without hurting their credit score. Make smart credit management your priority at all times to take the benefit of having a high credit limit.