If you have a pay monthly catalogue with a low credit limit or a credit limit which hasn't been increased for a while you are probably wondering what you can do to become eligible for a credit limit increase?
Pay monthly catalogues are a handy credit product which can help someone build or rebuild their credit rating.
New catalogue customers and those with some history of credit problems are usually given low credit catalogue credit limits.
Each Catalogue company will have it's own policy in terms of Credit limits.
Some catalogues are pretty generous when it comes to Credit limits and others may be more cautious.
In terms of credit limit increases each catalogue will be different.
Some customers are offered several Credit limit increases a year from their catalogue company, Others may only receive one or two increases a year.
Whilst some customers are not offered any credit limit increases.
A little as above, some customers receive Large credit limit increases and others receive small increases.
Catalogue companies are always most likely to offer low credit limits at the start this is especially true if you have had previous credit problems or an account with the catalogue before which wasn't run well.
Every time you make an application for credit or open a new Credit facility your credit rating will fall slightly.
This fall is only for a short period of time, as time passes the affects of Credit Searches and new accounts being opened will fade.
Some pay monthly Catalogue companies like Very, Littlewoods, Next, JD Williams will will receive a feed from the credit reference agencies to help them make decisions about Credit limits.
This means if you are taking on lot's of credit elsewhere or missing repayments your chances of getting a Credit limit increase are slim.
If however you are demonstrating Stability and are living well within your means your chances of being offered credit limits with your Catalogue are increased.
Most Catalogue companies will offer an initial credit limit of £1000 or less.
It's actually no uncommon for customers to be offered credit limits as low as £100.
It is true when people say a low credit limit can have an impact on your Credit rating, but it's a starting point.
This page is designed to help you understand how Catalogue credit limits work and how you can put yourself in a good position to get a Credit limit increase.
Each catalogue company will have it's own policy on Credit limits and when a customer will get a credit limit increase.
If you are new to your Catalogue company then you should start to be considered after 2 or 3 months.
Catalogue companies hope that by offering larger credit limits you will spend more money with them. However, they also want to know you can afford to pay more each month.
After seeing how you manage your Catalogue account and your first couple of payments you could become eligible for a credit limit increase.
Look Again and Freeman's both increased my Credit limit on month 3.
I have even known Look Again to increase the Credit limit on Statement number 2 (so after just one payment).
With Very and Littlewoods it took 6 sold monthly repayments before I received notice of a Credit limit increase, however, this increase was a lot higher than the other catalogue companies.
Next will review credit limits every 3 months, but be warned, Next may increase, reduce or suspend your Credit limit depending on what information the Credit reference agency supplies them with.
[wpsm_quote author=”Credit 4 Everyone” float=”right” width=”5″]Catalogue companies will consider a range of factors before offering you a credit limit increase, Your Income, Your Employment Status, Your Current Payment History, How you are managing credit elsewhere & most importantly, how you are running your Catalogue account.[/wpsm_quote]
As time goes on, your Catalogue will look at your account behaviour, So by placing regular orders with them and making sure you make all of your repayments on time they will see an active customer who can manage their repayments.
Each Catalogue company will have it's own policy on Credit limit increases.
Some Catalogue companies will offer regular increases usually by a few hundred pounds and others may increase less often but by larger amounts.
Some Catalogue companies offer customers the chance to Opt In and Opt out of Credit limit increases.
You should find the option to be considered for Credit limit increases in your account management area.
It's always worth checking in this section as it could be the reason why you are not being offered credit limit increases.
Some customers find Catalogues very generous in terms of credit limit increases whilst other customers are not ever offered a credit limit increase.
Each Catalogue company will have it's own policy, Sometimes customers who have lot's of debt elsewhere for example may appear overstretched and may not be eligible for credit limit increases.
Of course, All catalogue companies like orders, it's how they survive, the more you order the more profit they make.
Offering customers a higher credit limit means active customers have more spending power and are more likely to place orders.
A customer who hasn't used their account for several months is unlikely to be offered credit limit increases.
More Catalogue companies are now taking a more active roll in looking at your overall credit rating before making decisions on the amount of credit they will offer you.
They don't need to carry out a full credit search, they can receive a monthly feed from the credit reference agencies to help them manage credit accounts or they can view your credit file without harming your credit rating.
Those Catalogue companies will look at how you are managing credit facilities elsewhere, how many times you are applying for credit and what your overall debt levels are.
This helps them understand if you are in too much debt, So if you start struggling and start missing repayments on credit agreements elsewhere they are not likely to offer you more credit.
Access to your credit reports help them do a few things. It can help them protect themselves too. If you are taking on lots of credit elsewhere, they may become concerned you won't be able to make your repayments and so could use this information to lower or refuse credit limit increase requests.
In more severe cases, if a customer is showing signs of distress by not making payments on time or defaulting on credit agreements for example, your catalogue company may freeze your credit facility.
They will also keep in mind your income, When you applied for your pay monthly catalogue you would of completed a short application which included details of your Employment status and income.
These details are also considered to help run and manage your account.
If things are going well and you are keeping up with all of your credit repayments, your credit score and credit rating will improve.
Catalogue companies calculate everything by a Risk Score.
When you apply to them they will use a risk score to help them decide if you are a Risk to non payment for example.
The same rules apply in terms of credit limits.
A customer managing an account well with a £400 credit limit may start to struggle should the credit limit be increased to £2000 for example.
Affordability checks are now a legal requirement and Catalogue companies must demonstrate that they lend responsibly.
Your risk score with your catalogue company will reduce and they will be more confident that you can make your repayments if you keep your overall debt levels low, keep up with your repayments, avoid applying for too much credit elsewhere and make your repayments on time each month.
It usually takes around 3-6 months to start being considered for a credit limit increases, Some catalogues may take 6-12 months, it will depend on the factors we listed above.
The best possible way to convince your Catalogue to increase your Credit limit is to use your Pay monthly catalogue often.
Place orders with them and ensure you make more than the minimum repayment each month on time.
By paying back more than the minimum repayment you can help show that you are not in a financial situation and you can afford to pay back more.
From a business point of view, Customers that place orders and show they can afford more than the minimum repayment will demonstrate a good customer that the Catalogue company can make more money from.
Catalogue companies love good customers who place frequent orders and pay on time. They are always more likely to offer more spending power to such customers.
Some Catalogue companies will consider requests for credit limit increases over the telephone. Very and Littlewoods will do this and they have a function inside your management area which allows you to request a new credit limit.
Freemans and Look Again may consider customers requests, it does appear to depend on who you speak to.
Jd Williams however will not consider requests for credit limit increases. They tell us that they will contact customers who become eligible for credit limit increases.
NEVER PLACE ORDERS IN HOPE OF GETTING A CREDIT LIMIT INCREASE Some people on some forums say the best way to get a credit limit increase is to place a big order up to your credit limit and / or only make the minimum repayment.
You have to be seen as sensible yourself and making only the minimum repayment each month is going to cost you a lot of money in terms of interest.
Place orders as and when you need them. Catalogue credit limit increases are not guaranteed at ant time.
Even the state of our own Economy is considered before offering credit limit increases.
So only spend what you can afford.
If you have a Catalogue with a high credit limit you can reduce it or ask the Catalogue company to stop increasing it.
If you feel you won't be able to make the repayments with such a high credit limit then why not reduce the limit or opt out of limit increases to help you avoid temptation.
Sure, most catalogue companies will give you advance notice about credit limit increases. You will receive notice that your limit will increase on the next statement for example.
Sometimes catalogue credit limit increases are added automatically without any notice, you can still refuse or opt out of credit limit increases when you like.
Running a Catalogue responsibly will show you other potential lenders that you can make your repayments on time and that any past negative credit history will begin to be looked at along side a current Positive credit history.
This will give you more chance to be approved for credit such as Credit Cards, Personal Loans and Car finance.
It will also stand you in good steed for further Credit limit increases with your Catalogue.
Believe me, it takes time to improve a credit rating, it's a very long road and it takes a long time.
[wpsm_quote author=”Credit 4 Everyone” float=”right” width=”5″]However, each step you make is an important one. Each positive stone will eventually open the door to a much improved credit rating.[/wpsm_quote]
Once you demonstrate that you can make your repayments on time, stay within your catalogues credit limit and manage your finances elsewhere your Catalogue company is more than certain to increase your Credit limit.
