{"id":29013,"date":"2022-11-21T11:42:17","date_gmt":"2022-11-21T03:42:17","guid":{"rendered":"https:\/\/direct.imoney.my\/articles\/?p=29013"},"modified":"2024-02-14T17:45:50","modified_gmt":"2024-02-14T09:45:50","slug":"increase-credit-limit-credit-card","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/increase-credit-limit-credit-card","title":{"rendered":"Should You Increase The Credit Limit On Your Credit Card?"},"content":{"rendered":"

You walked into a fancy restaurant and had a scrumptious meal. But when it was time to leave, your credit card was embarrassingly declined.<\/p>\n

Then, you remembered the amount you have charged to your card the past few months. You realised that you have maxed out your card.<\/p>\n

We hope this awkward scenario was never experienced by you.<\/p>\n

The credit limit is the ceiling amount that you can charge to your credit card. And most people have mixed feelings about their credit limit. Most revolving accounts have a credit limit, such as credit cards or overdrafts.<\/p>\n

<\/span>Why is credit limit important?<\/strong><\/span><\/h2>\n

Some would worry about their credit limit being too high because they are afraid that their debts would spiral out of control. There are others who take the YOLO road. They want a higher credit limit so they won\u2019t risk maxing out their card (and worry about clearing the outstanding balance another day).<\/p>\n

Though the above are two valid concerns, there is one even more important reason why you should pay attention to it. Your credit limit can affect your credit health and credit score.<\/p>\n

A percentage of your credit score is determined by credit utilisation, which is how much credit you\u2019re using. Here\u2019s how credit utilisation rate is calculated:<\/p>\n\n\n\n\n\t\n\t\n\t
Total credit limit<\/td>RM12,000<\/td>\n<\/tr>\n
Total balance<\/td>RM5,000<\/td>\n<\/tr>\n
Credit utilisation rate<\/td>RM5,000\/RM12,000 = 42%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

The higher the rate is, the less creditworthy you are.<\/p>\n

Most lenders in Malaysia consider credit utilisation rate as one of the most important factors to assess your creditworthiness. In fact, 30% of your credit score is made up of amounts owed, or credit utilisation.<\/p>\n

<\/span>When should you increase your credit limit?<\/strong><\/span><\/h2>\n

If you don’t have a good grasp of your finances and debts, raising your credit limit is probably the worst idea you could come up with. Furthermore, if your finance is in disarray, your request to increase your limit would likely be declined.<\/p>\n

However, there are a few reasons that warrant raising your credit limit:<\/p>\n