When you apply to the bank for a credit card and they approve a credit limit, it may happen that it is not the one you expected, but a lower one or, you may be surprised and receive more than you had contemplated.
How does the bank set the limit on your credit card?
The financial institution values different factors:
- Cardholder delinquency
- Applicant income
- Credit rating
Why doesn’t the bank give me the credit limit I want?
If a stranger borrowed from you, how much would you be willing to lend him? And, if a family member does it, what is the amount you would allocate?
The same thing happens with banks. If the bank “knows you”, handles a savings account, payroll or any other credit of yours, knows how much you can pay, or has a way to direct the payment of your credits. You may have a chance to get a better line of credit.
However, if the bank does not know how you pay, it will only have your income level and your rating from the Credit Bureau to have a margin of payment possibilities, then your credit will be more limited.
Some banks take into account the length of time you have in your job, why? This is equal to the stability with which you have a fixed income with which to pay for the expenses generated by a credit card. Thus, if your income is not very high but you have been working in the same place for years, the bank will consider a line of credit above your ability to pay in exchange for the assurance that you can continue to pay.
It is important that you keep in mind that having a credit card is not an extension of your income, but an expense that you must cover. Taking the plastic to the limit without having the security of being able to pay it will generate collection expenses and interest that will pay a debt with the risk of becoming unpayable, so it is important to know how to use your credit card and take care of your finances.
As a customer, you can request an increase in your credit line from the bank. There is no guarantee that they will grant it to you, however, there is a possibility depending on your behavior as an account holder.