Credit Limits Are: Definition, Functions, Types, How to Increase Credit

Admin BFI
25 January 2023
Credit Limits Are: Definition, Functions, Types, How to Increase Credit

A credit limit is a loan limit set by a financing institution to limit loan funds or credit that can be submitted by the debtor.

Everyone has a different credit limit, and this limit can be increased with existing terms and conditions.

So that you don't misunderstand what a credit limit is, let's look at the following explanation.


1. Get to know the Credit Limit

A credit limit is the maximum limit of funds that can be borrowed by a person from a non-bank financial institution, bank, or other finance company. This maximum limit is determined based on various factors such as income, credit history, and the number of assets owned by individuals.

Not only that but the credit limit can also be used as a benchmark for the amount of risk that a financial institution may accept. One of them is the worst risk of bad credit or default.

2. Purpose of Determining Credit Limits

A credit limit is a limit that is deliberately determined to limit the amount of a loan submitted by the debtor. The hope is that with a credit limit, losses that may arise between the two parties can be minimized. The other goals include the crucial things below.

  • Measures the risk that a financial institution may accept, for example, the risk of default.

  • Control one's level of debt to maintain financial stability.

  • Avoid withdrawal of assets or collateral due to the inability to pay off existing installments.

  • Helping financial institutions to determine the interest rate to be charged on loans. The higher a person's credit limit, the lower the interest rate charged, because financial institutions consider that person to have a lower risk.

3. Type of Credit Limit

Credit limits are credit limit provisions that do not only apply to credit cards but also apply to other financial products.

3.1 KTA

KTA or unsecured credit is a type of credit that does not require collateral or collateral at the time of application.

Even though it doesn't require collateral or guarantees, KTA limits are generally determined from payslips or credit card limits for those who have them.

The amount of credit limit without collateral (KTA), is generally not too big to minimize the occurrence of bad credit or default.

3.2 Multipurpose Credit

One of the most widely used loans is multipurpose credit. This type of credit requires the prospective debtor to guarantee his assets according to the type of loan chosen.

Such as vehicle BPKB collateral loans and house certificates. The credit limit obtained is also greater than KTA (loan without collateral). You can get almost 85% of the proposed asset value.

3.3 People's Business Credit

People's business credit or abbreviated as KUR is a credit program made by the government in collaboration with banks in helping UMR or micro businesses. Each bank has its own policy regarding the amount of KUR that can be disbursed.

3.4 Home Ownership Loans

Homeownership credit or mortgage is a type of credit that offers convenience in getting your dream home. This one credit limit is generally determined from the value of the selected house and fixed income per month.

3.5 Credit Card

The last type of credit limit is, of course, a credit card. Every bank that has credit card services must apply different credit limits according to the terms and conditions that apply.

Some of the determining points for credit card limits include monthly income, total debt at the bank, home ownership status, and the amount of credit requested.

4. Factors that Determine Credit Limits

Credit limits are not determined arbitrarily. There are several factors that serve as benchmarks for determining credit limits or limits. Starting from income, history/credit score, home ownership status, and the amount submitted. For more details, see the following description.

4.1 Income

A credit limit is a limit for someone to be able to apply for a loan. Income is one of the determining factors.

The bank or finance company will ask for your monthly income as proof of your ability to pay the existing installments as well as determine the credit limit that will be given.

At this factor, the creditor will usually ask for a payslip or bank statement that you use.

4.2 Credit History/Score

Many of us may be familiar with the term credit score. The credit score itself is a measure of the eligibility of whether a person's loan application deserves to be accepted or rejected. This score is calculated through the OJK SLIK service or what used to be known as BI Checking.

4.2.1 How to Check Credit Score

  • Visit the nearest OJK Representative Office in your area with the required documents and fill out the debtor information request form provided. You can check the completeness of the requirements at the following link.
  • The OJK will check and examine the required documents and the debtor information request form. If you have fulfilled the requirements, the OJK will print the results of the debtor's information.
  • Furthermore, OJK will confirm and submit the results of the debtor's information to the applicant along with a receipt that must be signed by the applicant.

3. Home Ownership Status

Property owners such as a house are one of the determining factors for your credit limit. Financial institutions tend to favor potential lenders who already own their own homes. This is believed to be a guarantee that your financial condition is stable and able to pay off existing installments.

4. Amount Submitted

The amount of credit you apply for is the next determining factor. The bank or finance company will analyze whether the amount proposed is proportional to the fixed income each month. In this way, creditors can determine credit limits according to the debtor's ability to pay.

How to Increase the Credit Limit for Multipurpose Financing

Even though it's not easy, it doesn't rule out the possibility if there being an existing credit limit. Talking about how to increase a credit limit, of course, is closely related to the use of a credit card. So, for those of you who have a credit card or are planning to have one in the near future, here's how to increase the limit on a credit card in the style of BFI Finance.

Limit Kredit Adalah

Image Source: Freepik/KrishnaTedjo

1. Complete All Requirements Requested

Administrative requirements are the first step to increasing the credit limit you want. If you do not fulfill these complete requirements properly or if something is missed, the creditor can reject your application.

2. Make Sure Your Credit Collectibility is Good


Credit collectibility is a determining credit score. The existence of this score is able to show a person's ability to manage finances, especially in the ability to pay debts.

Based on Bank Indonesia (BI) Decree No. 7/2/PBI/2005 on BI circular letter No. 7/3/DPNP dated 31 January 2005 concerning Asset Quality Rating for Commercial Banks, BI Regulation No. 14/15/PBI/2012 concerning Asset Quality Rating for Commercial Banks, and Financial Services Authority (OJK) Decree No. 29/POJK.05/2014 concerning the Business Conduct of Finance Companies, there are 5 levels of the quality of a prospective debtor's credit score. The explanation is as follows.


  • Credit Score 1: Current Collectability
  • Credit score 2: Collectibility Under Special Mention (DPK)
  • Credit score 3: Substandard Collectibility
  • Credit score 4: Doubtful Collectibility
  • Credit score of 5: Loss Collectibility


Also Read: Know Credit Collectibility, Important Score Before Applying for Credit


3. Make Sure the Value of the Proposed Assets is High

Applying for loans from finance companies and non-bank financial institutions with a choice of guaranteed financing products, of course, the disbursement of existing funds is determined by the value of the assets you submitted. The higher the value of existing assets, the greater the loan you will get.

Tips for Increasing Asset Value

  • The assets submitted are in accordance with the criteria provided by the creditor.
  • Try to keep these assets in prime condition. You can carry out maintenance or renewal of machines if the assets proposed are motorized vehicles.

4. Income Per Month

The creditor will ensure that your financial condition is stable before you can increase the existing credit limit. One way is to look directly at your monthly payslip for several months. If it fits and there are no problems, there is a high probability that your application will be approved.

So, for those of you who need a fast loan with a series of benefits for business capital, children's education expenses, to lifestyle, you can apply for a loan at BFI Finance. What are the advantages of applying for a loan at BFI Finance? The following is a series of benefits that you can get by applying for a loan at BFI Finance.


BFI Finance is a company that provides multi-purpose loans with guarantees for motorbike bpkbcar bpkb, and house or shophouse certificates


Friends of BFI, this information regarding Credit Limits is: Definition, Functions, Types, and How to Increase Credit. Applying for credit is a common thing people do. However, before you decide to apply for credit, be sure to choose an official financial institution that has guaranteed legality.

Home Certificate

Low interest rates start from 0.6% per month and long loan tenors up until 7 years. See Terms

BPKB Motor

Get a loan with a fast process and a maximum tenor of up to 24 months. See Terms


Get a disbursement fund of up to 85% of the vehicle value and a tenor of up to 4 years. See Terms

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