Bangalore: Statistics show that the usage of credits cards in India has surged over the recent years. Credit cards come with undefined happiness but when you don’t use it in a right way; you might get into a serious problem.

The credit limit purely depends upon the cardholder’s income and the usage of his credit card. Sourcing of your credit card information by the credit card companies plays a vital role in determining your credit.

Usually most of the companies source the information in two ways, one is through income documents that you submit, and the other is through your association with the brand or a premium club.

“Business Today” has listed out 4 ways through which your credit card company will source the information on your credit limits.

1. Income or Tax Documents Sourcing

Sourcing through Income or tax documents are the most commonly used methods to source information. The credit card companies usually calculate your credit limit using a multiplier with your average monthly income.

However, the card issuer will take into account the credit bureau report and the number of loans that you have taken rather than just considering your gross monthly salary. Infact, the company will also collect information about if you have taken any personal loans and whether you are paying the monthly installments regularly.

Apart from this your total of all the EMI’s will be divided by your monthly gross salary. This way of calculating is called “debt-burden ratio”.

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