When a bank customer applies for a credit for the very first time, there are certain limits on the sum of money he can reckon on. It happens due to the fact that a financial institution at first can not fully trust even a customer with a great credit history in other banks. In such a way, banks have an opportunity to prevent both themselves and a client from unexpected financial problems.
Credit Limit: General Concept
To begin with, a customer should understand what credit restrictions are in general. The loan’s limit is the maximum amount of money set by the bank for each specific customer. In other words, it is an amount of a bank loan provided by a financial institution based on customer profiling which includes an average monthly income, reliability of a borrower with all the lending history data. Credit limits are usually applied when a customer opens a credit card for the first time. The amount of loan may vary depending on a bank institution a customer uses but there are only three types of lending:
- Standard loan. The limit is set by the bank and includes no changes in the amount of loan during the entire credit agreement.
- Unsecured loan or a blank credit. The limit is set by the bank individually due to the specific data provided by a customer.
- Secured loan. The limit is set by the bank depending on the estimated value of the customer’s collateralized property.
5 Tips of Getting a Bigger Loan Limit
Some banks automatically increase the limit for those customers who often use their cards and show a good level of reliability. If you want to get more money and to increase a limit, follow some easy steps below:
- Use your card more often. Pay with your credit card for everyday purchases and bring the number of expenses closer to the limit. Banks react to the amount and categories of purchases.
- Pay off the debt in advance. At least 3 business days before the date of obligatory payment so the money will be transferred to an account by the time.
- Keep in touch. Leave at the bank all your current information such as phone number and email. Warn your bank about any changes before.
- Report a bank about income growth. Bigger income due to a job change, salary increase or additional earnings helps to make higher your level of reliability.
- Use other services of the bank. A debit card or deposit shows the bank what income and savings you have and how you manage them.
Since almost all the calculations are made automatically by a special analyzing program, customers should follow all the steps mentioned above to try to get a bigger credit limit.