Approval of the first credit card may be difficult. You need to find a credit card company that approves it, even if you did not have a loan before. If you have already found a credit card and you have been congratulated! If this is your first credit card, the credit limit may be lower than expected. Do not worry it’s absolutely normal to have a small credit limit when you start your first loan.
The Reason for Your First Credit Limit Being Low
Most credit card companies use credit history as a basis for making decisions on the applicant’s credit limit. A person with a good record of credit management will have greater chances to get a higher credit limit. However, since you are a new user of credit cards, you do not have a responsible credit card history. The issuer of your credit card does not know how much credit it can take, so it usually starts with a small limit. If it turns out you are not ready for a loan, you will pay the credit card company only a few hundred dollars, not thousands.
You might have a $100 as your first credit limit if your first credit card is a retail credit card. It can be approved for a slightly higher credit limit of $300 or $500 if the first credit card is a Visa card or a MasterCard issued by a bank or credit card company.
Your first credit limit is unlikely to be higher than $ 1,500 except if you previously have a credit history. For example, if you have a mortgage or a car in your credit report.
Normal Credit Card Limit.
With a Lack of experience of your previous credit card, you may not be aware of the possibility of obtaining a higher credit limit than originally issued. The average credit limit can give you an idea of what you expect if the loan is managed effectively.
Credit bureaus that compile credit history use a rating model to measure the ability to repay borrowed money.
People with excellent credit history have a higher score than those who always delay payments or fail to meet their obligations. VantageScore 3.0 is one of the models used by credit bureaus.
Bigger customers who have VantageScore 3.0 between 781 and 850 have the best historical credit, according to Experian, one of the three largest credit agencies. Taking into account that the average consumer has three credit cards, this implies that the average person with excellent credit has an average credit limit of over $11,000. On the other hand, the average credit limit for a consumer of better mortgages with a credit rating of between 300 and 499 is over $ 1,200
Making Maximum Use of a Reduced Credit Limit.
Don’t get frustrated with the initial credit limit. It is better to start small until you get used to the loan service. You will not deepen your credit card debts until the credit limits make you overwork yourself.
When you show that you can actually make good use of your credit card, such as quick payment of bills, avoiding the maximization of your credit card, you will be eligible for longer credit limits over time.
Some credit card companies will immediately increase the credit limit after a few months of timely payments. Others increase the credit limit on demand. Wait for your credit card to be paid in time for at least six months before requesting you to increase the limit on your credit.
Ways you can obtain a first major credit limit
- You can obtain a higher credit limit on your first credit card by applying to either a parent or spouse with an existing fixed credit history and a good income.
- One other option is to request a secured credit card, which will give you a security deposit with the credit card for the loan amount. For example, for a $ 2,000 credit limit, you would be required to deposit a $ 2,000 security deposit. With a secure credit card, your security deposit will be returned to you for as long as your account is in good
Obtaining a Credit Limit Increase
Regardless of your initial credit limit, if your charge is less there’s always a chance for an increase. If you make payments early each month, and you are able to manage your credit well. Most credit card companies normally go through your account frequently and increase your credit limit immediately.
Capital One, for example, can instantly increase the credit limit on your credit cards after you’ve made your first five monthly payments early.