How Credit Scores in South Africa Are Affected By Credit Limits

January 21, 2021
credit score

People are often wondering how to build a credit record in South Africa, as the terms are sometimes not clearly defined. Some known ways are taking on loans and paying them back promptly and in-full. Many can start with a popular method of getting a credit card and using it with responsibility and care. 

Credit cards are typically given with an attached limit, and this limit can vary in size. Some people might feel more comfortable increasing their card limit, while others may opt to stick to a comfortable one that’s easier to pay if they need to take an emergency loan. It is common to seek out a loan provider when things get rough, which is where you’ll have to observe your credit card to ensure that credit scores don’t take a hit. 

About Increasing Your Credit Limits

If you’re wondering how a credit limit affects your overall standing with the banks and lenders, it boils down to building trust with payments. Lenders will consider financial data gathered about you, payment histories, current credit scores, and other income statements attached to your name. If you’re applying for the first time, your credit score is likely low or even zero to begin with, as you have not taken out any loans and paid for them. 

Paying your card bills on time and fully will show banks that you are a trustworthy borrower, which will make them offer you a higher credit limit on your card. This instance is often a double-edged sword, as many tend to overspend and end up heavily in debt. Going over the limit is also met with penalties and negative consequences, which will carry over to the next month of payments.

Exceeding Card Limits

Using your credit card is recommended, but it isn’t a good idea to go overboard. Credit utilisation ratios additionally determine the actual credit ratings of a person. If your card has a limit of $20,000 and you use $10,000, the rate is 50 per cent. Combining all credit lines will give a total utilisation rate, with a higher number affecting your score negatively. A good rule of thumb is to have a utilisation ratio of around 20 per cent or less to be considered a positive impact on credit scores. 

Exceeding the limits will reject any transactions based on overdraft protection parameters on the card. If this isn’t a selected option, exceeding limits will warrant penalty fees in the monthly billing statement and increase interest rates, affecting expenses. 

Before You Increase Your Credit Limits…

You have to consider some things before you opt to boost your credit limits, and these come in the form of pros and cons. Here are the various advantages and disadvantages that come with an increased limit:


Increasing the limits will bump up the amount you can use on the card to spend. However, it is advised to use credit cards as emergency options to make purchases because these can negatively impact credit scores. Additionally, a larger limit will reduce the utilisation ratio and can is an excellent way to improve credit scores over time. 


If you aren’t well-versed with financial management and budgeting, higher credit card limits can put you in heavy debt with crazy interest rates. These habits will often be hard to get out of knowing that the debts stack each month, so avoid paying the minimum amount on the monthly statement and avoid late payments. 


If you’re wondering how to build a credit score in South Africa, having a credit card is one of the best and easiest ways to build a relationship with lenders. First-time borrowers might have lower credit limits, but these increase over time, along with the trust that is built. Avoid making emergency loans to prevent bad financial decisions that can impact credit scores negatively.

Hoopla Loans is a premium loan provider in South Africa that can supply quick payday loans with high approval rates. Whether your credit score is exceptional or still being built, we can provide fast cash into your bank account today. Get in touch with us today to secure a deal ASAP!