What is your Credit Limit

Credit Limit explanation

For the benefit of those who don't know what are their credit limits, this blog aims to raise credit awareness not through funding campaigns or expensive seminar talks, but from generating fruitful comments leveraging on the internet. The beauty of technology is that it enables users from all walks of life, globally, to input their comments and encourage healthy discussions, to the extent of bringing in real-life experiences so that readers may avoid certain pitfalls.

Who sets credit limits for retail lenders?

The most common type of individuals who fall in this segment is you. When in need of extra cash, the first impression awards to (bread & butter) retail banks. These bankers, regulated by strict laws, adhere to financial regulations and are often in the reviewing process by professional accredited auditors hence the chance of mishap is way lower than credit lending firms. A typical retail bank offers competitive rates, pegged to the Credit Union, and promotes healthy competition between inter-bank interests rates. The limits being offered are tagged to credit cards for book keeping records and of course, being reduced proportionally to the outstanding loan amount.

Where does the credit limit deduct from?

For retail credit borrowers, the most common way to to take loans from credit cards. Firstly, it is imperative to know where does the magical 'limit' figure appears. When direct sales officer access the individual's monthly contributions from various sources, the potential figure is put up for approval. Once the compliance team clears the application, the credit team decides the rates, which are reviewed from time to time, under their mercy. Finally, the credit limit appears for the officer to help borrowers loan the respective amount.

Based on normalize rates, the limits being imposed are up to 4X the current monthly salary. For entrepreneurs, the limits is pegged to the fixed pledged credit cards being approved. Credit is disbursed to the borrower for the stated loan tenor and relevant interest rates. Nowadays, the rates are close to zero, based on the Federal Chief and audit committee team, which makes personal loans so lucrative and a booming season to begin with. This positive move generates much cash flow around the economy and the cycle helps credit to flow through even at an increasingly amazing rate.

Can I temporary increase my credit limit? Increase your credit line?

A common question frequently asked by borrowers is the extension of credit limits. As the limit is fixated by the reviewing team, there is no way to directly increase unless the borrower undergoes the troublesome process of credit review team, the individuals may request for a temporary increase instead.

Simply take up the phone and call the hotline for assistance. Under common circumstances, a raise of up to 30% increment may be approved under managerial level for a duration of 2-3 months. It is not impossible for an increase unless the credit rating is so poor such as past bankruptcies or currently owing money.

Alternative to Credit cards is credit Lines

For those who had exceeded their current credit limits or unable to apply for increments, an alternative route is to sign up for Credit Line! Don't worry, it is not something with higher costs of borrowings or possesses any hidden charges. In fact, credit lines are more flexible with viable options as well as incurring a lower interest rate for borrowings.

Firstly, credit lines cannot work like credit cards whereby an individual swipes to buy items, it has two key functions and this chapter brings attention to appropriate usage through adequate explanations. The first thing is cheque book and its self-explanatory. Simply issue checks and the amounts will directly be credited to your payers or debited to your payees.

The second part resembles credit card loaning process whereby the borrower takes up a personal loan using the credit limits within this credit line. Of course, the limits are far below the norm, typically pegged up to 2X monthly contributions, helps an individual to buffer some sudden expenses like hospitalization costs or unplanned family holiday trips.

As you can see, there is beauty in possessing credit cards and lines that helps to faciliate some transactions with lucrative interest schemes, aim to improve or even upgrade your current lifestyle. Be sure to watch your credit limits and maintain good credit rating at all times. Prudence concept applies here!