One of the many obstacles which results from a bad credit rating is the difficulty in obtaining a credit card with a high credit limit. Naturally lenders perceive those with bad credit as high risk and thus aim to minimize their exposure to losses. However, whilst it may appear that those with bad credit would be better served by having a limited credit facility to prevent further mismanagement of finances, another argument is that a high credit limit card is one of the most expedient tools to improve bad credit.
Most commonly those with bad credit are restricted to cards with low credit limits. If it is possible to be approved for a high limit credit card then the card holder can demonstrate their improved use of credit by maintaining a gap between credit utilized and available credit. Using less than 30 percent of available credit is a good method of increasing ones credit score, which in turn paves the way to offers of increased credit limits.
Consumers with bad credit are more heavily scrutinized when applying for credit cards than those with excellent credit, thus income can come into the equation. Having a high income does not necessarily equate with fiscal responsibility, but can be considered as an advantage when credit limits are set. The best way to be approved for a high limit is to speak to the card issuer before submitting an application, with ones credit score to hand, to gauge the level of available credit that is on offer.
It is never going to be simple to obtain a high unsecured credit limit when one has bad credit, which is why secured credit cards offer the most viable option. A security deposit equal to the credit limit required will in most cases guarantee approval, and give the perfect opportunity to rebuild ones credit score at the same time. Ideally one should look to apply to a mainstream lender rather than a sub prime lender.
In cases where a large security deposit is placed with the bank it makes sense to use one that pays interest on the deposit. Orchard Bank Secured MasterCard is one such card that pays interest on deposits held. Using secured cards responsibly will result in a transition to unsecured credit cards in time, which in turn carry fewer fees.
Another viable way to be approved for a high credit limit is to use a co-signer who will guarantee equal responsibility for payments due. The guarantor will need to have a good credit rating themselves and should be aware that they are putting their own good credit reputation at risk by acting as a co-signer.
Of course the best way to be approved for high credit limits is to present with a good credit score. Those with bad credit can continuously work to improve their credit standing by ensuring all payment obligations are met on time and credit utilization rates kept low. Tips and advice on improving credit are available from Myfico. As credit improves lenders may automatically increase credit limits or card holders can periodically request a credit limit increase.