Want to Qualify for a Higher Credit Limit? Here are 3 Tips for You

Today, a Personal Loan is one of the most sought-after means of borrowing, especially for salaried professionals. This is no surprise, considering the convenience it offers as an unsecured source of emergency funds. You can use a Personal Loan to take care of a variety of needs, right from renovating your house to paying off credit card bills. You can repay a Personal Loan through EMIs, where your EMI amount is decided based on the interest rate and repayment tenure.

So, when you are looking to borrow a Personal Loan, of course, you want to be eligible for the highest credit limit possible. But the credit limit on a personal loan can vary a lot among different lenders. You also need to consider the amount (or lack thereof) of leverage you have as a borrower. In most cases, the difference between a loan offer with a higher and lower credit limit boils down to your credit score and repayment history. We’ve listed 3 basic tips you need to follow in case you want to qualify for a higher credit limit. Here they are:

1. Maintain a Good Credit Score

Whether you’re a borrower or not, you’re sure to have heard about the term ‘credit score’ and its implications on your loan application (when you do borrow). Your credit score is a three-digit number that reflects your creditworthiness and financial standing. The higher your credit score, the more trustworthy you’re considered to be, and vice-versa. Therefore, banks usually offer higher credit limits and favourable terms to customers with a good credit score. If your credit score isn’t that great, it will reflect on the credit limit and loan terms offered to you.

2. Pay Off Existing Debt

Apart from your credit score, lenders also check to see if you can take on and pay off your debt within a reasonable period. After all, that’s what any loan is, isn’t it? A form of debt that you must pay off as per a set repayment schedule. In this regard, your lender will check your debt-to-income ratio (DTI). Your DTI will tell your lender how much debt you can take on (if at all) based on your obligations and monthly salary. If your DTI is high, you will be considered a risky borrower. In case that happens, it may be a good idea to sit down and see how much of already existing debt you can pay off, based on your financial situation.

3. Look for the Best Offers

This is the first step that anyone looking to borrow a loan must undertake. While the eligibility criteria to borrow might be similar among a range of lenders, each lender has different criteria for qualifying for a good credit limit. Therefore, you need to evaluate several loan providers before arriving at one that works for you. The loan amount, interest rate, as well as the loan terms, must make the loan offer a reasonable enough one for you.

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In Conclusion

The three points illustrated in the article are basic steps that you need to take if you want to increase your chances of being eligible for personal loans with a high credit limit. You need to shop around so that you’re aware of the latest offers as well as maintain your credit score since it is the standard against which all loan companies lend.