Credit Limit On First Credit Card: How High Should It Be?
The appearance of the first credit card in life becomes a significant event for people of any age. For young people, this is usually the first experience in handling credit funds and a good tool for learning this. It is clear that in the absence of any credit history, they can only count on the minimum credit limit. For older people, the first card is often not the first credit, so the natural question often arises about what should be the credit limit on first credit card.
Of course, most adult Americans have at least one credit card, but for those almost 30% who do not have one yet, a credit limit on first credit card will depend on various factors. If you are only going to get the first one, then this issue will probably be relevant for you, and we suggest that you look at it in more detail later.
Count on the low limit initially
On the credit card market there are many offers of various options, then you just have to choose the most suitable one and submit an application to the issuer. However, when doing this for the first time, you should not think that you will immediately receive any significant credit limit on first credit card.
When determining the credit restrict for a particular client, each lender will first of all weigh the risks, for which he examines all the factors that affect them. One of these elements is the history of dealing with a specific type of credit, so the lack of experience on the first credit card will affect the low limit, even if you have a successful credit history.
In most cases, the credit limit on first credit card will be from one to five hundred dollars, depending on other factors and circumstances. Find out further what will affect the limit of available credit set by the issuer.
Credit Score and History
The credit score is made up of all credit events in your credit history. American credit bureaus have their own scheme for calculating your credit rating, but in general it is affected by the same events in different proportions, which differ slightly in different companies.
This number reflects your reliability and creditworthiness based on your credit history. The higher your credit score, the more trust you deserve among creditors, including credit card issuers.
If you have a sufficiently long history of using the loans that you paid on time, then you have very high chances to get credit approval, as well as a higher credit limit on first credit card. Your current loans are also important because they determine not only your ability to pay, but also the total amount of your debt. At the same time, you should not rely only on this factor.
Your current income
How much you earn at the moment every month will be the second element that will be scrutinized by the lenders. The ratio of your income to debt will show lenders what opportunities you still have. This is your financial safety margin, which reduces the risks to them. The lower the ratio, the more attractive a client for credit card issuers will be.
Number of credit requests
There are certain indulgences in relation to tight credit requests when purchasing a home or car for two weeks, you apply for loans in different companies to compare conditions and assess your chances for approval.
However, if in your credit reports for the last months there are many hard requests from lenders, this is perceived by them as your urgent need for money. This situation, of course, does not add to you the advantages in lenders’ assessing.
Duration of employment
The first thing that reduces the risks for lenders money is the financial stability of their borrowers. If you work long enough at one company, then this is perceived as a financially stable position.
Even when you change your place of work, all your financial obligations must be paid on time during this period. In any case, frequent shifts of companies, as well as long periods without work, carry risks for credit card issuers, even if you didn’t allow any missing payments.
Credit limit increase
Naturally, when applying for a credit card, everyone will be interested in more than the minimum credit limitation in order to have more options. Although this is contrary to the essence and rules instituted among creditors, but you have the opportunity to immediately increase your credit limit on first credit card.
The first way to do this is to choose the variant of a secured credit card deposit. A protected card often offers more opportunities due to the fact that it is provided with your funds and therefore carries less financial dangers for the issuer. In this regard, the creditor can provide you with a larger credit limit tied to the credit card security you have provided.
Use a cosigner
When you are going to register a credit card for the first time, a joint statement with a person who has a good credit history will help you get a larger credit limit. Also, you must have mutual trust in each other. This can be a member of your family or any other person who meets the specified criteria.
Pay on time or earlier
The previous two options will be appropriate for those borrowers who are only going to have a first credit card. For those who have already received their first card with a minimum credit, it is time to progressively work on raising it.
The most basic and most effective way to achieve a credit increase is the timely payment of mandatory payments. In the worst case, it should be the minimum payments, but more likely to get more credit soon will be provided by the full monthly repayment of the used credit.
Each timely payment will add you credit points, which over time will lead to a review by the issuer of the credit line, if there are no other obstacles to this.
Keep your balance as low as possible
The balance on your credit card shows your use of the credit provided by the issuer. The higher this indicator, the less trust you will have in your creditor, as well as in others of them.
Do not make big expenses so as not to exceed a third of the credit line allocated to you and in a few months most lenders will be ready to give you a larger credit limit, subject to other conditions.
Take the best credit card for you
Use the opportunities that the Internet provides to you today and learn about the different offers of credit cards to choose the most appropriate for your needs.
You can get all the necessary information for this without leaving your home. Also, use our online resource to get useful knowledge about personal finances, credit cards and everything that will help you achieve your goals, solve emerging problems and build a successful future.
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