What is a credit limit?
When it comes to credit cards, your credit limit is one of the most important things to consider.
A credit card limit is the amount of debt you can have on your credit card at any time. This is determined when you apply for a new card.
The minimum (around $1,000-$2,000) and maximum ($100,000) credit limits vary on different credit cards. You can go over your credit limit, but you better not as you might be charged a fee or new transactions will be declined.
Although they’ll take your request into account, your provider will ultimately make the final decision on your credit limit. To do so, the providers will assess the following:
- Income — a regular income will look good and will increase your chances of a good credit rating. It doesn’t hurt if it’s high either.
- Employment — if you jump around jobs every 6 months or so, this might not look good. They prefer stability. Part-time, casual, or contractual employees might also find it harder to get a higher credit limit.
- Credit history & debt — having a bad credit score and some outstanding debts will lower your chances of getting a good credit limit.
Together with your card, a letter will be sent to you detailing the terms & conditions you must know.Reasons You Should Decrease Your Credit Card Limit Click To Tweet
You can submit a request to raise or lower your credit limit if you’re not satisfied or want to change what you have.
There are reasons to change your credit limit, such as:
- If you keep going over your limit and feel the current credit limit isn’t enough.
- You’re spending too much using your credit card.
- After reaching a certain point, you want to cut yourself off from spending.
Having a lower credit limit means you can have discipline over your spending. As they can be cut off after spending a low amount, this is good for people who struggle with temptation to use their credit cards.
A lower credit limit can be advantageous because:
- The less money you can borrow, the less debt you can accrue.
- You won’t be rejected for increases, which can harm your credit score.
- Higher or no limit cards are more likely to come with higher fees.
Moreover, a higher credit limit can actually have a negative effect on your chances of getting a loan. Even if you’re a responsible card user, lenders might view your credit limit as potential debt — offering you a less deal or refusing you altogether.
Has any of these happened to you lately?
- become unemployed
- suffered bankruptcy
- foreclosure on your home
- suffered another type of financial crisis.
If so, your credit report will show negative marks that can affect your borrowing ability.
Pretty Penny Loans specialises in bad credit loans that will provide you with funds for anything listed above, and then some. PPL’s specialised bad credit loan does not consider a bad credit history as a limitation.
Consider PPL’s bad credit loans online as the first step to deal again with the bank or top credit providers, which could happen within 6 months.
You need to provide your personal details and latest bank statement to process and approve your application.