Approved for a Low Credit Limit
It’s usually very exciting to know you’ve been approved for a credit card. However, it’s very discouraging to realize that such Credit is a low one. Probably you’ve been anticipating a credit card with a four-digit credit limit only to be approved for a few hundred dollars. While it may not seem worth it, it’s advised you maintain the card even with its low nature.
The reason your Credit Limitis very Low?
Your credit card was actually approved with it being low for some reasons.
- Maybe the very kind of card you applied for is distributed to all cardholders at the same rate. This is often true for retail store credit cards and subprime credit cards, but it exists with other cards.
- A poor credit history or no credit history at all can also be the reason. For a small card, High credit card balances or low income are other reasons.
Handling a Low Limit Credit Card
Except if the limit of this credit card has a lower limit than all your other credit cards, it’s advisable for you to still maintain it. If you don’t have any other open credit cards or you’re making an effort to improve your credit history, this low limit credit card can help you improve your credit.
You have a good credit score when you keep your credit card balances low compared to your credit limit. It’s pretty difficult with a credit card with a low limit. However, presently make use of your credit card for little purchases alone and ensure that your payments each month are as at when due. The best option is to ensure that your credit card balance is about 30% or less of your credit limit as advised by credit card experts.
Obtaining a Credit Limit Increase
A few credit card issuers increase your credit limit the moment your card is utilized effectively for many months. The time frame varies by credit card issuer but can range from six months to a year. If after six you haven’t received an automatic credit limit increase, you can contact your credit card issuer to place a demand on credit limit increase. This can be done via your online account. Or better still, call customer service to request an increase.
Let’s say your increase request isn’t accepted, you will receive a statement stating the reason. Work on improving your credit in those areas so you can qualify for a larger credit limit subsequently.
After six months of effective and efficient credit card usage, you can make an effort to apply for a credit card with another credit card issuer. This time, your attempt to get a bigger credit limit might just be successful.
Get a Secured Card
Lastly, if you can afford it, you can obtain a secured credit card and make payment for a higher security deposit. (Your credit limit is usually equal to your security deposit.) it might be of benefit to you since secured credit cards are stated on your credit report just like other credit cards.
A credit card with a higher credit limit on your credit report makes you stand on a better chance and makes it more likely that you will be approved to obtain a credit card that comes with a high credit limit. As long as your secured credit card is in good shape. your security deposit will be refunded when you close the credit card or it is changed to an unsecured account.