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Credit Rating, Credit Limit and Credit Repair Guide

Sometimes it is necessary to increase your credit limit to allow for more available funds when needed.

Most people increase their credit card limit before they go overseas on a holiday. Some people also like to increase their credit limit to pay for large expenses if they use a rewards credit card for example. By using their card to make these payments they will garner more awards points. It certainly helps to pay attention to these things if you want to take advantage of special offers.

Choose a responsible credit limit for your credit card

Choosing a credit card

Depending on the credit card that you will apply for, there will already be a certain limit of what you will be able to have. Low interest rate cards, with no frills have lower credit limits, which will be up to maybe $5000. Now there are credit cards at the other end of the market. Platinum credit cards will higher credit limits starting at $10,000 and go up to around $100,000. If you don't need a credit limit between $10,000 - $100,000, don't apply for those cards. Start with the low interest rate cards with no frills. Just because you pick a platinum credit card, it doesn't automatically mean that you will receive a high credit limit.

Comparing credit cards

Rates last updated November 20th, 2018
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
NAB Low Fee Platinum Card - Exclusive Offer
19.74% p.a.
0% p.a. for 25 months
$90 p.a.
finder Exclusive: Take advantage of 0% p.a. interest for 25 months on balance transfers with no balance transfer fee.
Citi Clear Platinum Credit Card
12.99% p.a.
0% p.a. for 14 months
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
Offers a 0% p.a. for 14 months balance transfer and $0 first year annual fee. Plus, insurance covers and Citibank Dining Program perks.
ANZ Low Rate
12.49% p.a.
0% p.a. for 15 months
$58 p.a.
Save with a 0% p.a. introductory rate on balance transfers for 15 months with no BT fee. Plus a low 12.49% p.a. interest rate on purchases.
NAB Qantas Rewards Signature Card
19.99% p.a.
0% p.a. for 6 months with 2% balance transfer fee
$295 p.a. annual fee for the first year ($395 p.a. thereafter)
Collect 90,000 bonus Qantas Points when you spend $4,000 within 60 days of account opening. Plus, a $295 annual fee in the first year.
Citi Platinum Credit Card - Exclusive Offer
0% p.a. for 13 months (reverts to 20.99% p.a.)
0% p.a. for 13 months
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
finder Exclusive:
Save with 0% interest on purchases and balance transfers for 13 months (with no BT fee). Plus, a discounted $49 annual fee for the first year.
Qantas Premier Platinum
19.99% p.a.
0% p.a. for 18 months
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Get 70,000 bonus Qantas points when you meet the spend criteria and 30,000 more when you pay the second year's annual fee (100,000 total).
CUA Low Rate Credit Card
11.99% p.a.
0% p.a. for 13 months
$0 p.a. annual fee for the first year ($49 p.a. thereafter)
Take advantage of a 0% p.a. balance transfer rate for 13 months, $0 first year annual fee, and a low ongoing 11.99% p.a. interest rate on purchases.
HSBC Platinum Qantas Credit Card
19.99% p.a.
0% p.a. for 12 months
$199 p.a.
Enjoy 60,000 bonus Qantas Points when you spend $3,000 within the first 3 months. Plus, complimentary travel insurance.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
20.74% p.a.
0% p.a. for 18 months
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus points in the first 3 months and save with a $64 first year annual fee. Plus, a long-term balance transfer offer.
HSBC Platinum Credit Card
19.99% p.a.
0% p.a. for 22 months with 2% balance transfer fee
$129 p.a.
Offers a 0% p.a. for 22 months balance transfer and an annual fee refund each year when you spend $6,000. Plus, 2 airport lounge passes every year.

Compare up to 4 providers

How to decide on a credit limit

Credit card companies are going to ask for your income and requested credit limit. It's important to choose a responsible credit limit for your credit card. You don't want something that is too high, where you are going to max it out and then not be able to pay it off. Credit histories are always looked at for other things such as mortgage requests, car loans and sometimes employment.

When thinking about a credit limit, it is a general recommendation to get at most 50% of your monthly income. But it is even better if you can get 30%. Therefore, if you make a monthly income of $5000, then you should request between $1,500 and $2,500. If you know you are going to pay it off every month, then you can get the higher credit limit. But if you have trouble with spending, then you should stick to the lower credit limit.

The only exception to this is if you are trying to max out some reward credit cards to get frequent flyer miles or reward points. If that is the case, get a higher limit but only if you are going to pay it off each month.

One thing to remember when deciding on your credit limit, is that it won't be able to change for at least six months. Even then you will have to request either an increase or decrease. Credit card companies are not allowed to increase your limit without your permission anymore. Keep that in mind so you're not regretting your decision within the first month.

Credit card company's decision

As mentioned above, the credit card company will have the final say on your credit limit. It will most likely be based on credit history and income. If you have a good habit of paying off your balance each month, then you will be more likely to get a higher credit limit. But you ultimately give them a starting base for them to decide.

When trying to decide on a responsible credit limit for your credit card look at the different credit cards and what type of limits they offer. Then think about your situation and request between 30%-50% of your monthly income. Remember, how you handle your spending and your credit history will impact other important financial decisions. The credit card company will ultimately have the last say on what your credit limit is but it is up to you to keep spending responsibly. You should pick a reasonable limit and stick with it.

Clean your credit file

How to increase your credit limit

Your credit limit can be increased by calling your bank or visiting your local branch. Usually this is pretty much instant or else your increased limit will start to take effect once you last credit card bill has been paid off. Before you ask for a higher limit make sure you do the following first:

  • Be loyal to your bank. They trust a long-term customer more than people who have no financial track record, but if there are better deals around, don't be scared to switch.
  • Keep paying those annual card fees. This will establish trust between you and the credit card provider.
  • Pay off your credit card debt in full each months. The easiest way to do this is by setting up a direct debit from your savings account. If you do, make sure you check your credit card statements thoroughly to spot any discrepancies. If you don't, then your financial details might be abused by cyber thieves without your knowledge.
  • Pay attention to the offers coming through your mailbox. Some credit card companies will mail you appropriate offers from time to time. Know they don't do this willy-nilly. They usually have access to a large database of financial information about you and wouldn't offer you a new card unless they know you are suited to the offer.
  • Credit utilisation has a big impact on your file. You never want to use all of the credit available to you, lenders look negatively on that. Using less than 25% of your available credit limit is favourable, while using more than 80% negatively affects your credit file and borrowing power. Fortunately, a high credit utilisation will not hurt your credit rating forever. When you reduce your balances, or have the limits increased, your utilisation will decrease and your file will go up.

How to increase your credit limit after having your credit file repaired

Some consumers find themselves unfortunate enough to run into financial troubles at some stage in their lives. If that happens to you, not all is lost as long as you work with your lenders. If you show a genuine interest in wanting to repair your credit, then chances are that by following the above steps you too can increase your credit card limit eventually.

If you are having difficulties in obtaining credit, you might want to find out how a credit repair service can help remove the defaults on your credit file. Learn more about credit card repair service.

With the right knowledge and your own willingness to better your situation it is possible to increase your credit limit after doing credit repair on your credit file.
Images: Shutterstock

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Credit Card Offers

Important Information*
Citi Platinum Credit Card - Exclusive...

Interest rate

20.99

Annual fee

49*

*$149 p.a. after first year

Virgin Australia Velocity Flyer Card ...

Interest rate

20.74

Annual fee

64*

*$129 p.a. after first year

American Express Westpac Altitude Pla...

Interest rate

20.24

Annual fee

50*

*$249 p.a. after first year

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2 Responses

  1. Default Gravatar
    September 13, 2016

    Quoting from the guide: “Using less than 25% of your available credit limit is favourable, while using more than 80% negatively affects your credit file and borrowing power”

    What exactly defines utilisation? If for example, I spend 81% of my credit limit, but then pay that off before the due date, does that count as credit utilisation? Or is it only if a balance is carried each month that the credit is actually being utilised?

    • finder Customer Care
      DebbieSeptember 21, 2016Staff

      Hi Brendan,

      Thanks for your question.

      To exactly define credit utilisation, it is the percentage of your credit card balance versus your credit limits. For example, you have a balance of $5,000 and your credit limit is $25,000, then your credit utilisation is 20% (balance/credit limit*100). If you spend 81% of your credit limit, you need to pay the balance before due date or make it lower and achieve at least 25% credit utilisation rate before statement closing date so your credit report won’t be affected.

      I hope this helps.

      Cheers,
      Debbie

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