Why does my credit limit matter?
Your credit limit is important as on your credit report, your credit limit shows how much credit has already been extended to you. This provides insight to other lenders so that they can better assess your level of existing debt and avoid putting you at risk, by offering the wrong credit product.
By increasing your limit, you can improve your utilisation ratio, which can improve your credit score although this should be taken with caution. Your utilisation ratio is the percentage of credit you’ve spent against your overall credit limit –you should aim to use only 25% of the credit available to you, where possible.
Using only a portion of the credit available to you shows a lender that you’re a responsible credit user. For example, if you have a credit card with a limit of £4,000 and you’ve only spent £1,000, you have an utilisation ratio of 25%.