All you wanted to know about credit limit

Credit limit on a credit card is the maximum amount that a cardholder can borrow on their credit card. The credit limit on a credit card is set by a bank at the time of credit card disbursal and is decided after taking several factors into the mind. You cibil score will be affected by a credit utilisation on your credit limit.cibil score

The bank issuing a credit card will decide a credit limit on your credit card. One of the most important factors looked by a bank is your current cibil score. An applicant for a credit card will sign and complete know your customer (KYC) form mentioning all his details. After processing KYCs of a customer, banks will extract cibil score of the applicant from cibil’s website. Past credit history of the applicant would be analysed and a final credit limit would be assigned to the applicant depending upon his repayment potential.

cibil scoreApart from cibil score a bank would also look into applicant’s income, job stability, year of experience etc.It is often the case that despite having a higher income , a borrower don’t get a higher limit on his credit card. This happens due to a bad cibil score.

There are few measures that a borrower can take to get a higher credit limit on his credit card. Let us look at them –

  • Maintain a good cibil score.
  • Do not default on any emi or credit card payments.
  • Maintain a optimal balance of secured and unsecured loans.
  • Do not apply for multiple credit cards at once.
  • Maintain a track record of your credit card payments. Make sure that you don’t over utilise on your credit card utilisation limit.