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Can I increase my credit card limit?

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In simple words, Yes! It is possible to get your credit card limit increased by your bank. However, it depends on various factors.

Ways to get credit card limit increased

Yes! You read that right. There are multiple ways to have your credit card limit increased. Broadly divided, these are either applying for an increase or receiving a pre-approved offer from a bank.

Credit limit increase with documentation

Often, people who have had a recent increase in income can request their bank to increase their credit card limit. This is done by providing income proofs and other documentation that your bank will list.

Once you have submitted your application, the bank will process it based on its internal risk policies. It is similar to a loan application where you may or may not receive the offer based on your credit history and the stability of your income.

Pre-approved increase offer

A pre-approved bank offer to increase your credit card limit is based on multiple financial decisions you have made in the past few years. Many banks reach out to credit cardholders, based on the risk analysis of their profiles, and offer them an increase in their credit card limit without any documentation.

The bank that issued you a credit card keeps your portfolio with them. They periodically evaluate each customer's income, credit usage, credit score, and repayment behaviour.

You can access your pre-approved credit limit increase offer by contacting your bank.

If you did not receive an offer, here are a few healthy financial habits that can help you receive a pre-approved offer in the future.

1. Use your card

Banks also increase credit limits for customers who are just holding on to a credit card but not using it. This, however, takes time. If you don’t want to keep waiting, you can start using your card responsibly to fast-track the process.

2. Repay on time

A lot of people forget to pay their credit card bills on time. Some even simply wait till the last day to do so. A mistake like this could reduce your chances of being considered for a pre-approved credit card limit increase by the bank.

3. Maintain your credit score

This is where things get a little tricky. Your credit score is determined by various factors. A low credit score will also lead your bank to surpass you for an increase in credit limit.

4. Lower your debt

If you have multiple EMIs and credit cards, repay them. Banks also consider low risk when their total debt obligations are low as compared to their income. This is known as the Fixed Obligations to Income Ratio (FOIR). A low FOIR will increase your chances of getting a pre-approved credit limit increase offer.

The important thing to note here is WHY you want your credit card limit to be increased. Increasing your credit card limit to improve your credit score is a great decision. However, if you’re already in a lot of debt and want an increased credit card limit to pay off existing debts, stop.

In such a situation, you would only be keeping yourself stuck in the cycle of debt. Get a free debt assessment to analyse how you can get out of the debt cycle, and regain your creditworthiness.

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