Credit limit is a restriction on obtaining funds on credit from a bank or a specialized credit institution (like an automobile company or a housing company …). Credit limit – the maximum amount that can be spent or removed from a particular credit account or card.
Credit limits are renewable and non-renewable. A revolving (revolving) credit limit is one that can be used indefinitely under a loan agreement, receiving (paying off) and refunding funds by replenishing an account with a credit limit or a credit card. Non-renewable – a limit that is issued once (or for a certain amount of money), its repayment takes place in the bank, after which the corresponding loan agreement is fha loan limits The first type is more and more common, the second is extremely rare.
The limits depend on a large number of different factors, the main ones being the credit history (CI) and the credit rating. CI is a report of past credit transactions, showing past payments, the success of past creditors when working with a debtor. That is why, each borrower has its own maximum fha loan limits
Credit rating – an indicative estimate of the borrower’s solvency and responsibility, based on the credit history and making up a list of available debts, assets, liabilities. Many lenders, first of all, look at the credit rating when considering an application for a loan. They also use credit experts when assessing the borrower’s solvency. BKI (Credit History Bureau) usually helps to obtain information about credit operations and credit history in general.
Credit limits are carefully checked to ensure that the debtor does not exceed the solvency limit. If the credit limit is small and requires an increase, it is necessary to contact the lender and ask for a review of the previously established restriction. We strongly recommend not to exceed the limits of the established limit (even if given the opportunity) to exclude problems with the creditor and credit history in general.
In order to avoid going beyond the established credit limit, it may be necessary to write down your purchases in a notebook, or, more effectively, to pay expenses to a computer. There are many programs to control costs. It is enough to make available the data, and the client will find out how much money can be taken in this month / year, what is the average expense per day and whether it goes beyond the limit on average. Undoubtedly, these programs help most beginners, but also for experienced borrowers can also be useful. If the borrower exceeds the credit limit, does not return or permanent delinquencies , the creditor may place negative information in the credit report, which may adversely affect the future.
Dependence of the size of the credit limit on the actions of the borrower
New borrowers with a clean credit history are usually exposed to a fha loan limits than people with positive CI. An even greater limit is for people receiving a salary on the account of a given bank, cooperating with the bank or working there directly.
People who have an excellent credit history and a high credit rating often receive an increased credit limit. For a good relationship with a lender you need not only not to go beyond the credit limit, but even not to use it completely. It is best if it is actively used, but, of course, taking into account all force majeure situations, you need to leave a small percentage of the credit limit for them. The borrower, who has the opportunity to spend more money, but decides not to do so, is often considered responsible.
A large number of lenders use credit limits in order to assess new borrowers. Lenders follow the behavior of borrowers, prudently establishing a low credit limit. If a newcomer shows himself worthy of fha loan limits, makes planned payments and does not spend money for nothing, his limit is gradually increasing. If he suddenly disappeared the entire amount from the account, there are delays in payment, going beyond the credit line – the creditor not only does not increase the credit limit, he generally can refuse a loan and leave a negative review in the credit rating after receiving the full loan amount , interest and penalty for late repayment of the loan.